Swiss Re AG (SREN) Earnings Call Transcript & Summary

Good morning. My name is Thomas Bohun. I'd like to welcome you to the 2022 Swiss Re Investors Day taking place here at the auditorium at Swiss Re Next in Zurich. 18 months ago, we had to welcome all of you only virtually, so we're happy that at least some of you could join us physically today. But of course, welcome, everyone, joining us again virtually today. We have a full agenda again today and hope you find the day rich. We'll have Christian Mumenthaler, our Group CEO, kickoff, and he'll talk to you about our group strategy and our financial targets. He will be followed by Thierry Léger, our Chief Underwriting Officer, who will take you through some of our key underwriting priorities. We'll then take a short break before Moses Ojeisekhoba, our Reinsurance CEO, resumes the morning. We'll then have a Q&A session, the first one, before breaking for lunch. Andreas Berger, our group -- our Corporate Solutions CEO, will kick off the afternoon. This will be followed by a shorter session on iptiQ. We did hope to have Carlo Bewersdorf, our CEO of iptiQ, joining us today. Unfortunately, Carlo is on extended sick leave, so Christian Mumenthaler will cover that session. John Dacey, our Group CFO, will then take you through our capital management priorities and the transition to IFRS. We'll then end with another Q&A session. We'll take questions from the room. And for all those registered participants virtually, you can ask questions via the Chorus Call line, the same way that you do this during our earnings calls. And with that, I'm pleased to welcome Christian Mumenthaler.

Thank you, Thomas. And also from my side, a very warm welcome to everybody. Good morning, good afternoon, good evening depending on where you are. And a particular appreciation to everybody who made it physically. Again, it's definitely feeling better to talk to some people in the room than to be in front of an empty room here. So before we start the Investor Day, I want to say a few words about Ukraine, which is obviously on everybody's mind and is, first and foremost, an enormous human tragedy. As you can imagine, we have employees that are Ukrainians. We have employees that are from Belarus. We have employees that are from Russia. It's an incredibly emotional affair. We have more than 1,000 people in Bratislava, Slovakia, so for them, this is the bordering country, and they see every day the inflow of refugees from the war. So it is really an absolutely terrible situation, and I would think also a huge wake-up call for Europe. And I guess everybody who's European here will feel with me. Now you will appreciate that it's incredibly difficult to try to quantify the loss also because it's still developing. At this stage, with everything we see, we think that for the insurance and reinsurance markets, the loss will be comparable to a medium-sized nat cat event. And if you ask me what is that, I think about Uri and other events of that scale. The -- it will depend a lot how this develops. So the key factors are time. Obviously, the longer the conflict goes, the longer the sanctions are here. It will have a bigger impact on, for example, Credit & Surety. And of course also, if and when the part has come to a term and there is an agreement, the question will be what is in that agreement. So there's a lot of uncertainty. It's an evolving issue. Huge tragedy in Europe. At this stage, I see this as a midsized -- or we see this as a midsized nat cat loss. Now within those lines of business, we looked at our portfolio. We think we're about in line. We couldn't see any outsized exposure from Swiss Re, so we expect to be around our 10% P&C Re market share in whatever the outcome is. There's 30 people at Swiss Re working on that day and night, and their mission is, of course, to come up with something for Q1. I think in the first quarter, not the ultimate loss will be booked, only what was incurred. And I think there will be varieties amongst the players of what they choose to book. But ultimately, Q2, Q3, I think it will be much clearer and we'll have some convergence of views. So you will hear more on our Q1 results, May 5. With all of that, we still think that 10% ROE that we have this year is achievable even though it's getting harder, obviously. But it will depend on many factors like the nat cat season, financial markets, how they develop, how the war develops, et cetera, et cetera. So many factors, many uncertainties. And at this stage, that's all I can tell you around Ukraine, unfortunately. So with that, I'd like to get into the Investor Day. There are some key messages which we put here in writing for everybody who reads through that at home, so I'm not going to go through all of them. But the main purpose of the day is to talk about our strategy, how we intend to win in the different sectors we're in and the goals, the ROE targets of 14% by 2024 and how we intend to achieve them, and also give you an opportunity to hear from the business leaders about how the business is going and what is on their mind at this stage. John Dacey will also end the day with an update on IFRS 17, which is taking -- is a huge project taking a lot of our time and attention. So let me dive into the strategy. If you look at the macro level and what is on the minds of our clients, both insurance clients and corporates, you can imagine this is an intensive period in history. So you have the impact of climate change, which is now on everybody's mind, not just insurance or the corporates. This is a huge thing. There's going to be a massive decarbonization of the industry over the next 20 years. So this is absolutely top of mind of corporates. We have COVID-19 pandemic and all the aftereffects. That's another one. Rising interest rates and inflation, huge topic, as you can imagine. Thierry will talk more around inflation, but rising interest rates, I think it's important to remind ourselves that this is -- low interest rates have been really bad for the insurance industry for a very long time. We hoped for rising interest rates for a long time. Low interest rates basically mean capital is not that valuable. So rising interest rates is good for people who have capital. Then the supply chain disruptions, that's an enormous topic in particular for our corporate clients. There's a whole question of risk assessment, where you are, how to derisk some of these value chains. And then there's increased geopolitical risks. So there's huge challenge, I would say, for our clients all over the world. And we think we can definitely support them with some of our key strengths such as to be financially strong and resilient, to be global and diversified and to be partnered beyond risk transfer, which means that we have a lot of risk knowledge. And risk is on top of the agenda of every corporate, every insurance company. So with that, let me dive into the strategy as we formulate it. The strategy needs to be linked to the purpose, and the purpose of our company is to make the world more resilient. How do we do that? We put clients and partners at the center and help them to become more resilient. And we do that through classical risk transfer, which is here on the bottom on the slide, which is what we have always done, so act as a shock absorber; but also through risk partnerships, where we take the risk together; and more and more risk insights, so -- where we help our partners and clients to understand the risk, help them to mitigate the risk also through other means, capital markets, for example, or take it themselves. So the mandate for us is not just the classical -- risk transfer in the classical sense. It has become much broader. There's more ways we can use our strategic assets to support our clients and partners. And the question is then, how do we do that? How are we organized? So we have now -- we have come from quite separate businesses after 2012 to something more centralized or a mixture where we try to preserve the benefits of the strong entrepreneurial spirit we have in the business units. But also, we have a very strong core that is basically capturing the synergies you have within the group. So in the strong core, I put our people in there. We have about 220 managing directors across the globe. I know most of them. And there's, since many, many years now, a lot of efforts to move them around to make sure they know the different businesses. You might have seen our latest development that the head of CorSo in the U.S. is now going to head the Chinese business in Reinsurance. But we also had managing directors go from iptiQ to solutions business in Reinsurance. We have people from Reinsurance going to iptiQ and others. So there's a lot of focus of being able to have people who understand these different businesses and also allow some synergies between these businesses. And then there are some core, I would say, strategic assets we have and which are important to be at the group level because they're going to be deployed in these different businesses. Capital strength is obviously one where we have a lot of competition, on the capital strength. And it wasn't maybe that valuable in the past. With rising interest rates, it's going to come back. There's client collaboration and access. I think we have really excellent and unparalleled access to clients all over the world other than the corporate world. And then there's risk knowledge leadership, which is all the R&D we're using and which can be deployed in all three businesses. So when you come to the businesses, Reinsurance is at the center. That's really the core business. That's where we come from, and nothing is going to change there. A very powerful business. And then risk solutions -- or Corporate Solutions, sorry, repositioned as a specialized partner for the corporate clients. So it's not so much about scale, it's more about specialization and differentiation. And then iptiQ as a global platform, a B2B2C. So white-labeling insurance -- digital insurance platform for our clients. So that's a bit how we are organized with an emphasis on this One Swiss Re. So I expect more and more synergies around these businesses, more and more collaboration. I'll give you a few example after that. So we're active in three different markets. Here is an overview. We've asked a little bit what is going on in the market. So Corporate Solutions market, we see a market growth -- Swiss Re Institute sees a market growth of 4% to 5%. The corporate clients are seeing more and more complex risk. As you can imagine, risk management was not always on top of the agenda, particularly in good times. But in bad times like now, it is very much at the top of the agenda. There's this gradual shift from personal lines to commercial lines. We think that technology will help to derisk a lot of personal lines like motor or homeowners. But some of these risks will shift to corporates in the form of liability insurance, for example. And then generally, this risk advisory is really important -- becoming more and more important for the corporates. There's a lot of need and ask for that kind of service. And then in Reinsurance, we also have a -- grow -- actually foreseen a little bit higher, 5% to 6%. And within that, there's above-market growth in the most relevant risk pools for us. So nat cat and mortality. This is driven by economic development. And nat cat is driven by the fact that the high-value assets are shifted more and more towards the coast lines or basically towards the more risky areas of the world. So for many years, for decades actually, we've seen an above-market growth in the nat cat risks all over the world. There's obviously also this risk awareness through climate change, COVID, et cetera, and technology plays a huge role in that segment. And then iptiQ, obviously the primary segment overall is gigantic, but we have no intent to be just a primary company and then compete with our clients. That's not the intent. But we see a niche where we can play, which is a big niche and is increasing. And this is so-called embedded insurance. So to corporates in particular, sometimes other clients who want to expand in other countries, in other lines of business, they don't want to invest their own money, hundreds of millions, into systems to be able to do that. So there's more this plug and play, if I might say, approach. It's not a plug and play because it takes at least 60 days to onboard somebody. But you get the sense. So the sense that you can -- for many corporates, they try to monetize more of their customer base. They want to build ecosystems. And this is where an offer like iptiQ can play an important role. This market also, we think, is going to grow 5% to 6%. So these are the markets we're on. And now I just want to give you the high-level strategy of the different business units. And I'll start with Reinsurance. Moses will talk more around that. But when it comes to strategy, to me it's really much more a question of what are really our assets we have, what are strategic assets we have, and how do we deploy them in a unique combination to try to win in one part of the overall market. And we -- for that, I think it's useful to distinguish between what I call core reinsurance or the traditional reinsurance where you have about 100 competitors. And this has become more and more commoditized. This is more and more a cost play. It has been a cost play in the last few years. Capital was cheap, so you had a lot of entry in that segment. So this traditional renewal business is highly competitive. Now for Reinsurance, they definitely can compete in that segment because Reinsurance has a huge global scale and diversification and many other assets that they can deploy in that segment. But it's a tough segment. And overall, strategically, we have a move towards the right here towards transactions, we have talked about that many years; and then also solutions. So transactions is more tailored transactions that typically a CFO or CEO want to do large transactions. Sometimes, they cannot offer it to everybody. They want it to be discreet. And the number of players there are -- is much more limited. So we estimate about 10 players. And of course, the larger the transaction they want to do, the less competitors there are in this space. And then the solutions space is a step further. It's one that's really a value-adding service. So this can be risk consulting and things like that, but it's also very often something where we build up a business together with some of the clients. So for example, if we have a client, we enter flood insurance in the U.S. We develop the models. We have all the sophisticated pricing models. And then we go together with a client in that segment, and we share whatever is written 50-50, let's say. So this is -- there's much less competitors. We wrote here 20, but that's not 20 reinsurers. That's includes brokers when it's about risk services. It includes consulting companies, et cetera, et cetera. So it's a more specialized space. And as you can see at the bottom, there's a movement away just from commodity because just being in commodity would not be enough for Swiss Re. I don't think that's where we have our core strength. So what strategic asset can we deploy, are useful for these different segments? Next slide, I'll come to that. But there's basically the capital strength, and there's many people who have capital strength these days; diversification, which I think was quite unique; then we have Alternative Capital Partners, this is our ability to access the capital markets, where we're one of the top players. Then for everything, there's scale and efficiency; there's risk knowledge leadership, which I think we clearly have; and then there's client collaboration and access, so an unparalleled access to a lot of clients. And so to me, these strategic assets fit with the strategy. And I want to talk a little bit about them because I think they're basically the essence of Swiss Re. So not a lot to say about capital strength. You all know it. And as I said, I think this is going to be more valuable going forward. But in the past, this was not the primary factor. It's more a ticket, an entry ticket to play. But diversification is very powerful. We had an Investor Day, I think, 2 years ago where we showed some of the returns you would have depending on your diversification. So here's just a quick repeat. If I take the year '21 and I look at the ROE and I look at just the nat cat book, if it was stand-alone, the ROE would be 6%. But if I diversified in the P&C group, it becomes 12%. And if I diversified in the overall group, it's actually 26%. So that's the power of having Life & Health. Life & Health correlates more to financial markets. Financial markets is also a big part of the risk. So you get a huge diversification benefit within the group by being so global and by having all lines of business. And then ACP capabilities. So we are less in the traditional retro market. We are more on the capital markets side for many, many years. We now have more than $2 billion of medium-term to long-term nat cat capacity. So these are capital market partners who are with us and basically invest in our nat cat book. But we have different vehicles here. So -- but overall, $2 billion of capacity. We're the second cat bond arranger in the last 20 years. And by now, we have accumulated about -- per annum, we're doing about $80 million of fee income. So it's basically when you take a risk in and then you put it out, that's the fee income. Or when you structure a cat bond, you get fee income, et cetera, et cetera. So all of that together is about $80 million. So we are one of the bigger player in that field. And then scale and efficiency. You can see here the total cost ratios of Swiss Re versus peers. We always look at the total cost ratio because -- and the total cost ratio is whatever it costs for a unit of business to come through the whole value chain to us. So it's obviously our operational costs; it's the cost of brokers because we have some people who use brokers, some not, so you have to add it up; and then it's whatever you have to pay the clients for their own costs. So this is the whole value chain cost that we have. And as you would expect, with the size we have and the spread we have, despite all the additional investments we have in R&D, et cetera, we're one of the most efficient in the market. And then risk knowledge leadership. We have more than 190 proprietary cat models but many models more. We -- since several years, we now track every R&D program we have within the group so we have a pretty good overview. 670 FTEs are working in R&D across the group, many of those in the shop of Thierry Léger, obviously, but also in the rest of the group in 125 R&D programs. Client collaboration and access, I'm always very proud of that, I have to say, because we track these discussion notes. So in Reinsurance last year, there were 81,000 documented interactions between Swiss Re and some of its clients in Reinsurance. So it's a huge amount. For the big corporations or the big clients we have, it's about 200 people on each side we have a contact. So we're not just talking to the reinsurance department, we're typically talking, in a very broad sense, to the whole business. We know what's going on across the world. We help these clients in multiple ways. And we have, of course, a very good C-suite access. So this is a huge asset, to have this trusted relationship. We're very thankful for that with so many clients, and it allows us to bring innovations, to bring new ideas to these clients. So hopefully, that's useful to give you a bit of sense of what I see as strategic assets because they are really then deployed in the field for the strategy. So if you look at CorSo, it's actually a somewhat similar picture. We define sort of a core. On the left side, you have pure commodity excess and follow capacity. That's a segment. That's where you start usually when you're a reinsurer. So you just participate in some of the layers and programs through brokers. So you typically don't have access to the clients. You don't know the clients. It can be very profitable in a hard cycle but also very unprofitable in the soft cycle. So it's very cyclical here. And then you go also within core, but there's, I would say, a piece of the core which is where you know the client, where you're leading some of the programs, or you're leading some of the layers. And you have more access to the client; you need more capabilities to do so. And then you can further differentiate and go to international programs and innovative risk solutions, et cetera. And also there, the more you go to the right, the less competitors you have. And if you're in the global master policy area, there's really very few. And I think -- I'm presently very proud that CorSo has achieved that because at the time when we started, there were very few examples of people who have actually built it in-house. Usually, they acquired it through acquisitions. So CorSo was able, over the last 10 years, to basically build full master policy capabilities. It's a similar strength. So capital strength, diversification. Of course, it's not part of the same legal entity as Reinsurance that has access to this full benefit. There's the risk knowledge leadership, which is provided by Thierry's team to the units. And then those client collaboration and access and international program capabilities I just described are assets that are more deployed then on the lead capacity side and on the international program or innovative risk solutions side. So for CorSo, this movement is more important than Reinsurance because I think in the excess and follow capacity, that's a good business to be in here in the soft cycle -- in the hard cycle. But in the soft cycle, it's much tougher. And of course, it doesn't have the scale of Reinsurance. So we are particularly cautious and paranoid about this space. And we're also positioning, as Andreas will say, also this part of the business and refocus really on the areas we feel we have some competitive advantage. But the journey is already quite advanced and we're moving towards the right where we think we have more differentiating assets. And then finally, iptiQ, I'll talk about it in the afternoon. It's basically -- I mean, I continue to be very happy and proud about this. You have noticed that in the -- in this whole hype around technology, we didn't do many things, not as many as others. But we have really bundled our bets on a few things we thought would be successful. And this one certainly has been successful. There is a need on the client side, on the corporate side, as I said, to monetize some of their clients. But there's also need on the insurer side. There -- we have 1,500 clients on the insurance side. The biggest one, obviously, will develop their own digital capabilities, but there are many, many for whom this, I would argue, would be much better to use this kind of tool because we have invested already all this money and have the capabilities. There's a break-even planned for 2025, which means that we're not going to invest in many new ventures because, of course, the more we invest, the longer it will take to get to a breakeven. But we already have reached a pretty good geographical distribution. Similar assets from Swiss Re that play a role. I'll come back in the afternoon. But clearly, brand, global reach is hugely important. The client knowledge, a lot of clients we've got in iptiQ is because of relationships we had in CorSo in particular but also on the insurance side. Capital strength, risk knowledge is important when people want to -- when big brands want to work with you, they need to know that you will be there when you have to pay the claims. So finally on strategy, maybe one -- a few examples such as -- that you understand, the what I call synergies between the different business units. So IKEA was a long-standing, I think decades-long, client for Corporate Solutions. So they introduced iptiQ them. And now we work with IKEA with iptiQ. Zurich, obviously a very, very long-standing client of ours on the Reinsurance side. They also work with iptiQ. Definity is a client in Canada we know for a very long time on the Reinsurance side. They have decided to use the PULSE platform from CorSo, but we also did a principal investment -- pre-IPO investment in the company, thanks to this long relationship. Alphabet, a CorSo client, and we had also a co-investment with them in their Granular Insurance facility. But we were also able, through the connections, then to do a cat bond for Google. And then on The Hartford, this is a Reinsurance client for a very long time, and they have also decided to use the PULSE platform. So there's a lot going on. These are some of the names. But that's a bit the direction. That's the kind of synergies I can see between these business units. And so with that, I would like to go to our targets for 2024. I showed this slide, 17, at the full year results. Now we have a bit more color or figures around them. So we start with 5.7% ROE in 2021. There's about a 5-point uplift from COVID normalization, obviously assuming it normalizes; then there's a 1% uplift from the reduced drag from Life & Health of the pre-2004 book in the U.S.; there's an earn-through of higher underwriting margins of about 1%; and then there's this profitable growth combined with cost discipline, basically meaning you have a higher growth on the top line than you have on the cost line, leading to approximately 14%. And then we will hear more about IFRS today from John. I think we have a real benefit here because for about 20 years, we steer our Life & Health book with EVM, which is very much in line with IFRS. And so we don't have any business that look bad under IFRS. And that's -- I really see this as a huge advantage, that we have steered this whole business over such a long time in an economic way. So from what we see now, the equity will not be massively different from what we have now in IFRS. But the earnings streams are accelerated under IFRS, more like EVM. So we see an uplift on the ROE. There was a question, obviously, at the full year results, is "You achieved 14% just because the equity melts down." But there, you have two effects. You have the equity. As interest rates go up, the equity comes down. But you also have retained earnings. And so overall, we didn't assume a different equity base when we talked about this 14%. So this is not going to happen just through interest rates increase, it's going to happen through real things that are happening. So let me go quickly through some of those. So around the pandemic, will it end? So this might look like 3x COVID in different countries, but it's not. The top one is the 1918 excess -- or deaths we had in the U.K. I think it's a very interesting graph. You can see how it developed. And the reason I show this is it's just one example of how these pandemics usually happen all around the world. And then the next one is also the U.K. but with COVID-19. And I would say you -- I would suggest we see the impact of vaccines, which unfortunately came only after the second wave but had a positive effect on the third one. And then the U.S., where you have all the waves. And obviously, as you knew from the full year result, still a relatively heavy or a very heavy third wave, which is a mixture probably of low vaccination rates but also a general health status of the U.S. population, which is below what we see in the U.K. and other OECD countries. So we believe there's going to be -- we're going to enter endemic stage. Everywhere, of course, the virus can mutate further. But if history is any guide, this looks relatively positive. So I think it's reasonable to assume we're going to endemic stage from here on. Then the Life & Health pre-2004 book, that's a bit an arcane item. I'm aware of that. You have some explanations here, but I'll try maybe a bit -- an alternative explanation. This is all around term 20 policies in the U.S. These are policies where you pay the same premium for 20 years, and if you die, your family gets a fixed amount, which means that the risk itself in the policy is actually going up. As you get older, it's higher. But you have a fixed amount that you pay. After the 20 years, the insurance company will make you an offer to stay on the risk. And obviously, there's a question: now how much you need to increase it. A lot because the mortality risk has gone up a lot. And then there's a question: now how high do you put that? And how many people lapse at this point in time? And that's going to determine how much profit you make in this second phase of this product. So unfortunately, up to 2002 or something like that, these assumptions that were locked into GAAP were way too optimistic, which means that as we cross over this term 20, 20 years later, every year there's a negative difference between what was hoped for and what is actually achieved. And that's a drag that we -- you could see in the last 2, 3 years. It's still there in 2022. But 2023, we know how the book was booked. You basically had the benefit of a change in accounting policy in 2003, and we can -- we know we're going to have higher earnings of about these figures here. So $175 million in 2023 and $250 million in 2024. So, I mean, some of you were there in the Investor Day, I think it was 2014, where we talked about the restructuring in Life & Health. And we said we still have these issues, and it was so far out that it was meaningless to disclose anything. But since 2023 is now around the corner, we're happy to give you some sense of what this means for our book. And probably -- personally, I must say one more argument why U.S. GAAP is totally useless for Life & Health Re business. Because you have locked in assumptions, you can't change anything. You have a new view of it, but you can't do anything. But in IFRS, we'll be able to constantly have our assumptions. And obviously, in EVM, SST, we have written down these profits a long, long time ago. And then another thing we're actually -- we have not discussed enough is this growing the top line about 6% since 2020 -- 2012 and keeping the costs very constrained. So the figures here you see is about 1% CAGR from '12 to '21 in terms of the costs. And during that time, we -- the only divestiture that is clear is ReAssure, but that was just about $200 million. But during the same time, we had obviously to pay inflation; we built iptiQ from scratch; we built this primary lead capability in CorSo and built CorSo generally from scratch, and we acquired a few businesses in CorSo, et cetera, et cetera; we developed solutions in Reinsurance. So there's a lot of investments that have happened during that time. And the reason you see only 1% increase is that we took a lot of costs out from the rest of the business. Our estimate is about $650 million over this period of time. So this is the 2% to 3% I was referring to over the years. So it's real -- we -- I think we haven't discussed it enough, but it's a real capability, I think, in this firm to continuously work on efficiency, take out some costs, reallocate resources to do new things. So this is something we definitely intend to continue, and it's this last 1% to 1.5% you saw on the slide. Capital management priorities haven't changed. So I thought it was important to state that here. We still have a philosophy to make sure we have a superior capitalization, which is clearly the case now. We will grow the regular dividend over time. We will deploy capital for the business to grow, which is obviously now top of mind because it's a very positive business environment, and then repatriate excess capital if we cannot find any good way to use the capital, and I think we have a good track record in doing so when this was the case. Now a question that appeared after full year results, obviously: Why haven't you increased the dividend? So I think this is not a change in capital management policy. This was more a situation where we saw COVID is still here. There's lots of opportunities in the business. And all of these factors, together with the uncertainty, we decided to keep the dividend flat. But as the underlying earnings grow, you should expect us to increase the dividend again. So what about our targets? They were communicated before. So on the right side, the multiyear targets: 14% return on equity, 10% ENW per share growth. On the left side, 2022, so P&C Reinsurance, below 94% normalized combined ratio. Life & Health Reinsurance, $300 million net income. That included about $650 million pretax of COVID. Most of it we assume in Q1. So we're not -- with everything we see, obviously our experts haven't come together yet for the final judgment, but I think we're more or less in line with that. And then Corporate Solutions, lower than 95% reported combined ratio. And finally, return on equity of 10% for the Swiss Re Group. As I said before, of course we now have the Ukraine. We have other uncertainties. We had market movements that go through P&L and GAAP. So the question around the 10%, we are still committed, we still think we can do it, but it will depend on financial markets development, on nat cat, on the Ukraine war, et cetera, et cetera. But from our perspective, we can still do it. So with that, thank you very much for listening. And I think I hand over to you, Thierry.

Thank you, Christian. Good morning, good afternoon, everyone. As Christian laid out in his speech and as I mentioned it at the last Investor Day, we are living in a world that is more volatile and less predictable than ever before. I think that for a reinsurance company like ours, this is actually a net positive. Positive because more risks mean more opportunities for our group. Net positive because they come, obviously, with challenges. Today, I would like to go through some of these key challenges that we see and hopefully get across why we feel well prepared for those challenges. What I will cover less today is actually the actions I described at the last Investor Day that we would take to reposition our portfolio. What I wanted to assure you of is, however, we took those actions in a very resolute way. We have repositioned our portfolio, and I'm today very comfortable with where we were. Those actions were taken in the first half of last year. Since then, the teams have been repositioning also their focus, and they are now really fully focused on the clients and the opportunities out there. So it does give me a lot of confidence in the outlook of our underwriting portfolio. Christian laid out the environment, and let me focus particularly on the insurance environment. And I would like to start with the blue bars on this chart. You can see those are the insured losses for the industry, and you can see how these blue bars have just increased. And also lately in the last 5 years, you have seen a quiet, again, increased set of losses to the industry. The last few years have been driven, of course, by large nat cat, climate change-driven losses, by social inflation claims in our -- in the industry's liability book but also by the recent pandemic. When we go to the right side graph, you can see the orange line. The amber line is the inflation. It shows that we are actually coming out of more than 20 years of relatively benign inflation, relatively low inflation. And we have just very recently actually found ourselves with an increasing outlook for inflation and obviously currently in a relatively high inflationary environment. At the same time, you can see that the, and Christian mentioned it, the interest rates came down over the last 20, 30 years, have reached very low levels today, have maybe increased a little bit lately but actually not so significantly. So on the back of these large losses, the environment we are in, we can see the green line, which shows actually the price index for nat cat, but it's a good indicator for P&C price levels. And you can see that over the last few years, the green line has finally gone up again. And personally, I see no reason why that would stop any time soon. I think this environment, the world we're in and the losses that we see coming actually demand for higher margins, higher technical underwriting profits also in going forward. The gray-shaded lines so actually the capital that has flown into the reinsurance industry, and you can see that it has grown considerably over the last 20, 30 years and it has grown above GDP. So in the very long term, this has obviously been fueled by many different elements, and I'll come back to some of them later again. But there is no reason to believe that this is going to turn around suddenly, but I do believe that there will be more capital flowing, and I see opportunities in the reinsurance world to put these -- this capital at work in going forward as well. So to conclude, again it's a challenging environment, but it comes with opportunities for us. And I think we are well placed. So let me dive a bit deeper in some of the challenges, opportunities that we see. So nat cat is obviously one of our core businesses. And you can see that the nat cat industry has grown over the last 20 years by more than 7% per year. So that's the risk pool that has grown considerably over the last years. And we expect that this will continue in the same pace also in the years to come. Christian mentioned some of the drivers of that growth in nat cat. Urbanization is a very important trend. So more and more people moving to urban areas. And as we all know, urban areas tend to be where the big floods happen, where the earthquakes happen or where the storms happen. So as people move into urban areas, our exposures grow. Generally, we also see that the wealth is increasing. So when we look at the values, average values of an insured, they were just generally increasing with the wealth that exists in the world. And then a particular element, a particular driver in emerging markets is the middle class, the emerging middle class in emerging markets. So the middle class is the class that starts to buy insurance. So it's a very relevant class for personal lines business. So as the middle class emerges, obviously you see also more demand on the insurance side. So these are all important drivers. And if you look at the right side of the slide, you can see what we call the protection gap. So still today, when you take average nat cat losses of the last 10 years, you see that actually, about 2/3 still of the insured nat cat losses are not insured -- actually not insured. Not insured, not insured. So the -- if the losses are not insured, so only 1/3 is actually insured. So that leaves quite some potential for the insurance industry to actually close that gap and fuel the growth also in going forward. So that's why we are focused on this important line of business also in going forward. And we are investing considerable R&D in this line of business. As an example, over the last 3 years, we have been growing our models. So -- just a second. We have been developing -- just a second. I have to -- okay. I want to start here. So R&D, we have 150 years of experience in this line of business, obviously. We have 50 full-time experts that cover 190-plus models. And with these models, we insure -- we cover more than 90% of the global insured exposures. And you can see on the map the different models in the different parts of the world. We collect immense amount of data. So today, in this line of business alone, we accumulate 200 terabyte of data. And that just shows the granularity of data that we have. We know every single risk, obviously, is there, and we have very rich data in our models. Every claim is an additional data point for us and means our models are constantly updated. So these 50 experts, obviously, are always on their toes, constantly learning, constantly improving, they never rest and improve our models. And all of these models are not anything theoretical. They flow overnight, once a model has been approved, overnight into the costing of our new business. Sorry for the confusion. Maybe I confused it. Maybe my colleagues. So when we talk about these models and just look at the last 2, 3 years, we have adapted 12 existing models. So we have enhanced 12 models, some of them profoundly so. And we have created 15 new models. And when you look at this, you can see that we have been covering through these changes in only 2, 3 years more than 50% of our secondary perils exposure. So in 2, 3 years, we touch our models that represent more than 50% of a particular exposure. And when you see the landscape globally on the map, you can see models in Canada, Europe, U.S., India and Japan. So it really covers the globe. So that's really a sign of how active we are actually making changes to our models. And that is absolutely crucial because we -- you all know that typically, nat cat is a 1-year line of business. So these changes are not only possible through our own models, but we also can make those as we move forward and renew our business on a yearly basis. So when you go a little bit more into details, just two examples I wanted to make, and I hope they show the relevance of the changes we make. So convective storms in Canada. It might not be totally obvious, but if you go totally to the left of this graph, you can see there were no losses at some time; and then suddenly, the losses started to kick in. So we were wondering, because we obviously take -- we have 50 years, 60 years of history, so we tend to take all that history into account. So if you distribute 10 years of bad history with -- and add it to 50 years of good history, the average is pretty good still. So what you have seen is that obviously, it seems not to be applicable here anymore given the series of losses that we have observed. So we've looked at satellite imagery, actually very simple. We have scanned Canada, and we found that the built-up area in Canada significantly increased. So what happens then is that when there are these hailstorms going through the country, the frequency or the probability that they will hit one of these built-up areas just increases mathematically. And that's what we have seen. And also, we have seen that some of the materials that are being built in the buildings today are just much more valuable. And I guess one of the bigger changes that has happened are the solar panels that today, obviously, are on many more roofs than ever before. Again, that's something you can see through satellite imagery. So if you take this all together, higher frequency, higher values, it led to an adaptation of our model for convective storms, Canada, by 10% to 40% depending on where your risk is. Similar picture on wildfire. Australia, you can see a similar uptick in losses. And also here, we looked at satellite imagery. And what we found is that indeed, much, much more buildings built close to bushland. And building close or even into the bushland means you're just much more exposed than before to fire. So that's one thing we learned. The values, I mentioned already. Buildings -- new buildings tend to be more valuable anyway. But we have also seen that climate change in Australia, in many parts actually, has led to warmer, drier periods that are also longer. And obviously, that's an environment much more prone to fires. So also there, when we put everything together into the model, it has led to an adjustment of 20%, 50% loading compared to the old model. So very concrete changes to our models. Now obviously, these are models, and our teams are not just operating in an ivory tower. Our teams are connected with leading universities around the globe and -- to try to gain insights and improve our models. We're also staying very close to the developments on the open source side, so -- because we think that's an efficient way to gain new model insights. So we are very connected to what's going on outside there. And last but not least, our clients and our teams, the other teams that are in interaction with our clients, and that's actually what I wanted to show here, so how is this actually finding traction on the ground? So when you look at the last 10 years of combined ratio, so these bars show the combined ratio in P&C, nat cat only, you can see that only 2 years had a combined ratio of above 100%, and you can also see that only 3 years didn't pay for its cost of capital. And if you take the average of all 10 years, you get to 75% combined ratio, which obviously covers for the cost of capital over this period. And if you even consider the previous year developments, you get to an average combined ratio of 69%. And if you add up all the underwriting profits over the last 10 years, you get to a number of around $9 billion. So it really shows that this is an attractive risk pool that we are very keen to grow. It does not come without volatility, of course, but it comes with a volatility that we understand, a volatility we can adapt to on a constant basis. And we think in the long run, it is a very profitable book of business for us. Second area is around inflation. So inflation comes in different ways. It comes as economic inflation, wage inflation, health care inflation is relevant for us and, obviously, social inflation. And depending on the line of business, it impacts -- it's different inflation types that drive the lines of businesses differently. Let's take property. Property is driven mainly by economic inflation, and it's also mainly driven by short-term inflation. So the current short-term economic inflation that we see does actually have an impact on our property costing. So we had to adjust those parameters. If you go the other way to liability, you will see that actually, liability insurance, again I'm generalizing, is exposed to all the different inflation types: so economic inflation, wage inflation, health care and, of course, also social inflation. It's a long-term line of business. So the short-term outlook for inflation is less relevant for this line. But the longer-term outlook for inflation is obviously important for this line of business. And if you go all the way the other round, you get to Life & Health. Life and Health values are defined in nominal -- as nominal values, of course. So they are not inflation sensitive. So that's the book, and that's what -- that's where we have to be careful with inflation on the new business side. Now about 1.5 years ago, we have observed a general increased sensitivity to inflation -- not sensitivity, but an increased outlook for inflation. And we thought it would be good to kind of, we call it, undust some of our inflation processes. After 20, 30 years of benign inflationary environment, we thought it's good to kind of shake the teams a little bit and to check whether our processes work well. So we have started to increase -- again, improve our monitoring of the different inflation drivers. I will come to that again on the next slide. We have also looked at how this monitoring is connected with our underwriters, and we have made sure that our underwriters get, again, into the process of adjusting their inflation-related parameters on a more frequent basis. So as a result, over the last few months, for example, we have updated our parameters in costing for inflation several times. So I was very pleased to have gone through this, let's call it, exercise 1.5 years ago because when then really the inflation started to kick in, our teams were totally prepared for that and they could react very quickly. Social inflation, I mentioned that already 1.5 years ago. We -- at the time, at the last Investor Day, we didn't have as much visibility yet. But we said we think there will be a dip in court cases for a while because of COVID and because of all the courts being closed. You can see precisely this on this slide. You can see a real dip at the beginning of the COVID crisis. But then the courts reopened, and you can see that everything is going up as before, sometimes even faster than before. So there is no change to social inflation. And we remain very cautious with regard to our exposures to social inflation. So one of the actions I mentioned 1.5 years ago at the Investor Day was actually to reduce our exposures to social inflation, mainly large corporate risks, U.S. liability exposures. And you can see here that we have reduced by today these exposures by 2/3. So that's the type of actions we have taken. We went further. We have created a monitoring of social inflation. We have created insights into social inflation. And I'm sure we have today 10x better understanding of the drivers of social inflation and how they actually impact our portfolio than ever before. And as a result, I'm actually really pleased that we have some timid signs that finally on social inflation, we can see that the actuals that we see start to align really well with the expected parameters we put into our system. So we remain very cautious and we monitor social inflation very carefully. But I think we can see some first successes in this space. The third deeper dive I wanted to do is on cyber. Cyber, obviously, is a bit like nat cat but developing even more dynamically. Obviously, the whole world gets digitized, every industry gets digitized. People digitize their processes. Governments are -- and as everything gets digital, the use of data is exploding. So all of that obviously increases the cyber exposures a lot. And as a result, the demand for cyber insurance is up a lot. What we have seen over the last few years on the insurance side is actually a few years of not-so-good- combined ratios. So we have experienced relatively poor results in cyber insurance on a global basis. So if you take both together, bad results, rising -- increasing demand, that obviously is the perfect cocktail for price increases, and they have been quite explosive in the last year. So you can see that whilst we have increased our premium by 60% last year, most of the increase was due to price increase and only a little bit of it was actually due to real exposure increase. We remain very cautious with regard to cyber. We think it's a young line of business. We think it's not well understood yet. We also think that data is scarce. We also think that data is bad that we get today. The experience is lacking. Nat cat, 150 years of experience. Cyber, maybe 10. So means we set ourselves underweight with regard to this line of business. We are growing underweight. We are growing at the market, but we want fundamentally and strategically to be underweight in this line of business. Where we are not underweight is on our R&D. So we have invested even more on R&D to understand this line of business even better, improve our costing, our models around this line of business. So we are ready from an R&D perspective, I think, for further growth, but we will remain cautious for the foreseeable future. We will keep a very, very close eye on accumulations. That's the one big risk in cyber. We will also keep an eye on wordings, definitions. We think that's also an evolution. And we will go through lots of phases of unclarity before actually get clarity on what we mean when we say this or that. So it's a digital world emerging, and we have to adapt to it as a society but also as a reinsurance company. The last one is Life & Health. So -- and obviously, here it's about pandemic. So pandemic is not a risk that we are selling actively as a stand-alone product. Pandemic comes with our mortality book. We are the largest mortality writer in the world, and pandemic simply comes with that risk. So it's absolutely crucial in our costing to have a good understanding of the pandemic risks that is included in our mortality risk. So we have developed already in 2007 the pandemic model and have improved the pandemic model ever since. So every new pandemic, there were smaller, more regional ones, has led to adaptations of this model. And obviously, COVID has been a real test of this model and has helped us to gain huge insights into this model and how to load our business for pandemic. You can see here that the current loading for pandemic across our mortality book is $180 million per year. So it's a considerable loading. Christian said we -- our view is that we are moving into an endemic state of the pandemic. Of course, there's no certainty. There can be mutations. But currently, we -- that is in our expectations. As an underwriter, we have to figure out pandemic in the longer term. And is it -- will it become more frequent? Is the world you're living in today one where you have to expect more frequent pandemics like the one we have seen? It's a very, very difficult question to answer. So that is one we are looking into very strongly. And we're also looking into, is it going to cost us more or less going forward? For example, are we, now that we had this pandemic, better prepared? And therefore, can we mitigate future pandemics better than we could mitigate this pandemic? So in a way, the world -- the way I see it is that the more frequent pandemics become, they should actually be better mitigated because the society will be better prepared for these. Anyway, all of this is part of our thinking. But we see price increases across our mortality book in a way we have never seen it before. I mentioned that already several times. We see continued pressure upwards on the prices. And I'm actually very pleased about this trend, and generally, I'm positive with regard to our mortality book. Those were the four deeper dives. I really just have two other topics I wanted to cover. One is the strategic liability portfolio. So the way we steer our book. You have seen this slide already several times, so I just didn't want to let -- or leave this out. So just to show you on the right side where our book is today. You know that we have 45 portfolios. On every portfolio, we develop a forward-looking view. And so we consider all sorts of trends and competition and our clients and so on, and we come up with a forward-looking view. We then define whether a particular portfolio is on growth, on profitability or on risk. We define also strategies in the short term, in the midterm and in the long term for all these portfolios. We think that in the long term, this gives us an advantage in terms of beta and should actually really differentiate us from our competitors. You can see to the right so -- that today, obviously, our portfolio is in a better state than -- for many years or ever maybe. So the portfolio mix is a very healthy one. And all of the portfolios are actually -- almost all the portfolios are delivering an economic profit today. So again, I think it shows that we are, from a portfolio perspective, in a very good state today. The last point but is really not the least is around sustainability. Swiss Re obviously has committed to net zero by 2050. For us, it means we have to do something on the asset management side. I think we have been very, very active on that side. For our own operations, we've been very, very proactive. On the liability side, we have started a few years ago already. But I think we have, in 2021, accelerated the pace in sustainability in underwriting. So we have -- as you can see it on the slide, we have been one of the co-founders, there are eight founders, of the NZIA, the Net-Zero Insurance Alliance. The aim of that alliance is to develop a path for the industry to net zero. More concretely, you -- for those who have followed, for example, our oil and gas policy tightening, so in 2021, we have said that we do only conduct business -- we do not conduct business anymore with the 5% of the worst carbon emissions in the world. By 2023, we will extend that to 10%. And the latest policy change for oil and gas that we have publicated -- published, sorry, in March is that by 2030, we will not do business with an oil and gas company anymore that is not on a path to net zero. So you can see overall the confidence in our underwriting. We have taken action last year, but the teams are extremely focused on the future and the opportunities we have today. We have R&D that is well founded in our underwriting with real positive impact on our results. We have a strategic portfolio management that leads to beta in addition to the alpha that we think we can achieve. And last but not least, we do not forget to keep an eye on inflation -- sorry, on sustainability. With that, thank you for your attention. Over to the break. Sorry, that was a change.

Thank you, Thierry. We'll take a 10-minute break and then reconvene at 11:15, so just 5 minutes behind schedule. [Break]

Good morning, everyone. Can we take our seats, please? So we can continue. It's my pleasure to talk to you today about the Reinsurance strategy and how we are executing it. We will take a look at what happened in terms of where we've come from and where we are trying to head as a business. Clearly, the last 5 years have been challenging, driven by nat cats and also a global pandemic that we are not completely out of yet. But what you would see is that we have built a portfolio that's very resilient. And if you look at the P&C business in 2021, it generated GAAP earnings of $2.1 billion in what was effectively the fourth worst year on record from a nat cat standpoint. And when we take 2022 and the goal that we've set for ourselves for the P&C business of below 94% combined ratio, it's the best underwriting margin that we've targeted in the last decade. Clearly, on the Life & Health side, pandemic has had a significant impact. But as Thierry mentioned, our Life & Health portfolio is dominated by mortality. And when you write mortality, you expect that there will be losses that are paid from a pandemic perspective. New business value generation on the Life & Health business has been quite impressive, and I'll show that. And a strong underlying portfolio gives us confidence about the outlook of the Life & Health business. I will also share 3 earnings catalysts for the Life & Health business that should change the shape of the earnings curve into the future. So I start first with the strategic framework for Reinsurance. The 3 pillars will not be new to any of you, core, transactions and solutions, which Christian also covered. The core part of our business is the foundation for the business. This is where the relationships are built, we trade in day in day out. And then we overlay on top of that transactions, generally driven by financial needs of our clients. Whether it's earnings-driven or capital-related, they come to us, we partner with them to try and provide solutions for their business. And as we talk to our clients, it is very clear that they don't just talk to us about protection from a capital or capacity standpoint, they go beyond risk transfer. And in this space, we're able to talk to them extensively about the knowledge and the IP that we've generated, Thierry spoke about some of them today, and Christian also talked about the assets that sits behind it, but we go beyond just knowledge increasingly and also begin to talk about how technology impacts their business. And I'll give concrete examples later in the presentation. First of all, I wanted to talk about what essentially is one of the most important assets for us at Swiss Re. And this is a franchise value that we've been able to cultivate over decades. And this comes in the context of the relationships that we have with not just our target markets or our target clients, but the total market overall. Not every client is built the same way. Everyone is unique. And as such, we serve them accordingly, so right service for the right clients. And we use an illustration here, which are the 3 relationship trees that you see on the left-hand side of your slide, where we show you 3 examples of a relationship with a broker, a global broker, a relationship with one of our global clients and with one of our smaller clients in a country. With the global brokers at the very bottom, as Christian was trying to explain, are individual names of people within Swiss Re who are serving that client. And in the top end of the relationship tree are names, mapped into names of individuals in each of our clients. For the broker, in this case, you have over 10 interactions per day with this particular broker. So it tells you the intensity of the relationships that we have with our respective clients. With a global client, which is the high touch clients in the middle, the daily interactions is almost 5 per day. They have relationships in different parts of the world, issues, demands in different parts of the world, and we seek to serve them to a client in a country where we probably engage with them fortnightly. These relationships and our engagement with our clients, in a lot of the cases, we do direct. But we also partner extensively with brokers. This is far more prominent in the P&C business, where the needs are far much more varied and they need a broker to intermediate or where when clients are quite small from an efficiency standpoint, it's far easier to deal with that through brokers. But brokers make a key part of the engagements that we have with our clients. And through industry satisfaction surveys, we get also feedback from -- about how the clients feel about Swiss Re. And you can see on the P&C as well as Life & Health in our target markets, these target markets are clients that we deal with, they rate Swiss Re #1. In the total markets which goes beyond the clients that Swiss Re deals with, Swiss Re is ranked #1 in the P&C market, #2 in Life & Health. And with brokers in P&C, because this is primarily where we deal with them, they also rank us #2. We are working on that one to get to #1 eventually. Sub-markets, EMEA, Asia, South America, we are ranked #1. And in the U.S., we ranked #3 because in the U.S., there's a perception of the direct model that we run being in conflict with the brokers, and they vote in the satisfaction survey as a function of that. But we continue to work extremely closely with them to try to improve that component. But the franchise value, super important, is what we build on. And we seek to construct a portfolio. You saw this in Thierry's slide. This here, we populate it with the portfolios, the main portfolios, the macro portfolios within Reinsurance. Driven by a variety of factors that we examine continuously, we determine where each portfolio should sit between whether that's a portfolio we're seeking to grow, looking to improve the margins in that particular portfolio or, in some cases, looking more at risk in terms of trying to manage the exposure. We have a balanced portfolio overall, as you can see here. And I take 2 quick examples, #3, which is casualty and that portfolio is dominated by U.S. liability and U.S. motor. And those lines, because of our concerns around social inflation, together with the fact that we're overweight in these lines of business, we put that more towards risk. While nat cat, given again what Thierry just showed you, you understand why we rate nat cat, which is #1 -- #2 here in the growth segment. Important to understand that underneath each of these portfolios, there are sub portfolios, driven either by lines of business or by geographies. And I'll give you examples of that as we go through the presentation a little bit later. But this target liability framework shapes the nature of the portfolio that we're trying to build within Swiss Re. And you can see the effect over the last 5 years. This slide shows you -- it's done on an economic basis, so it shows you economic premiums as well as economic profits of the portfolios in Life & Health, in our Reinsurance over the last 5 years. And there are some trends that are unmistakable when you look at this slide. The trends are growth in economic premium over this 5-year period, significantly so on the Life & Health side, and growth in economic profits as well over this period of time in a very diversified way across client segments, across lines of business and across regions. When you look at client segments, the R&N segment, so the nonglobal segments in P&C, has slowly continued to grow in its proportion of our overall portfolio. And in Life & Health, the split between R&N and global shifts much more materially because you have significant large transactions that take place. And 2021, as an example, you'd see a significant split, and that's driven by a number of large transactions we did in Life & Health in the Americas. It's also why you see the share of the Americas portion of our 2021 premiums being as significant as it is here. But the key message is we have slowly grown economic profits and economic premiums, which enures to benefit. And this is what gives us confidence in the outlook that we established for the Reinsurance business, both in P&C as well as in Life & Health. That's in the form of the combined ratio in P&C, and when we get into Life & Health, you'll see how this then ultimately translates to earnings, both on a U.S. GAAP basis and moving forward as well. We've grown the portfolio efficiently, and I think that is super important from our own standpoint. You can look from this same observation period that we've used. Actually, we extended it here going back all the way to 2015, not just 2017. You can see that on a total cost basis, and Christian explained the definition of total cost and why that is important for our business, where you see portions of our business come in direct and some of it coming through the brokers. You go from a position where we were an outlier from a cost standpoint to being more in the pack relative to our peers. Now they have also improved their total cost ratio, which enures to the benefits of the entire industry. And the total cost ratio coming down is very important, especially when you begin to get into segments that are much more price-sensitive, such as R&N somewhere further down the road. And for us, the glide path that we have been on through 2021, we expect to continue over the next 3 years, driven by growth in the underlying business, but also driven by the actions that we've taken in terms of either taking cost out, process improvements; deployment of technology and making sure that when we are making investments, it's more of a redeployment of resources and not necessarily just increasing the underlying cost of the business. This is for both Life & Health as well as for P&C. So our focus for the next series of slides, on the P&C part of the business, which, again as I mentioned, over -- if we take 2021, has shown significant resilience if you consider the environment that we were in and the performance of the business, not just in terms of the net income we generated but also in the context of our key competitors as well. So it shows a strong resilient business that we intend to continue to grow. And we find it a business that's quite attractive, and I'll talk about this in the context of our portfolio as well as the broader environment overall. So looking at the environment, the P&C franchise. For us, it has clearly has scaled and is diversified across the respective regions. You can see we've got healthy market shares in the 3 regions. In both P&C and Life & Health later, you'd see Asia will always have a lower market share because of the presence of national res, which is what you don't see in EMEA or see in the Americas. But in Asia, that's prominent. They take some share. So the shares of the international players will always be a little bit lower. But you see an unmistakable trend in the growth of premiums over the 5 years, economic premiums, in this case, new business premiums over the 5 years that we have registered here on the slide in the Americas, in the EMEA as well as in Asia. And that is driven by exposure growth, Urbanization, I think Thierry mentioned some of the drivers behind urbanization, climate change, all of these factors are increasing exposure. We also see that our clients have significant demand that are financially driven, whether that's to protect earnings from a volatility standpoint or to manage their capital much better. But the discussions we have with our clients goes well beyond again just the topics of risk transfer and goes into how do we actually help them in their own original business. And again, here, I will come back a bit later on the solutions side. So backdrop, healthy markets over the decade that we're in. We expect the premiums to continue to grow at a relatively strong rate during this decade. In a way we get into some of the specific portfolios that we find to be quite attractive. So nat cat, no surprise to you that this is a portfolio we would want to grow, again given the slides that Thierry presented, both from a historical standpoint performance, but not just the performance, importantly, the amount of IP that sits behind the decisions we make in terms of where we want to allocate capital or where we want to write business. All nat cat is not made exactly the same, as you can see in the sub portfolio distribution here. Cat XLs, we find very attractive because of the amount of data that we have, the way we're able to align risk and premium much better, markets reaction overall to ensuring that the premiums that are being generated covers the exposure adequately. So from a Cat XL standpoint, it's a space where we want to continue to grow. While in the aggregate space, we started derisking in 2019 because you have things like trend risk, not so easy to be able to model, too close to the money when it comes to events that could happen. So this is a space where we reduced our exposure, and we see the benefit of that in our results in 2021. It's a risk pool and a premium pool that has grown over the last 5 years, as you can see on the slide. And we also put our expected nat cat budget for each of the respective years. We show you 2022, where we expect premiums to grow by around 10 percentage points. About half of that will come from rate increases to cover the inflation component as well as the model changes that we've [ effected ] in the portfolio, driven by things like secondary perils like European storms, where we've made adjustments. But we also make adjustments to the expectations around the nat cat budget for some of those -- for the reasons that I've just mentioned a minute ago. But 2021 performance, 77% combined ratio, pretax U.S. GAAP income of $1 billion. So a very attractive segment and one that I will take, in terms of results, any day. So this is why we have confidence in this segment and why we continue to grow it as a segment. I think it's important to point out on this slide that we've picked up nat cat premiums, and we take nat cat premiums from everywhere that we write it, so that's in property, that's in specialty. This slide represents the totality of our nat cat premiums. Next segment is specialty, which is topical right now. But again, here, you see a similar trend of premium growth and solid performance over this 5-year period that we register here. This has not been a benign period for specialty. There have been events during this 5-year period, whether it's collapse of dams in South America or it's capsizing vessels or airplanes that have crashed, unfortunately, and the associated liability that has come with that. So even with all of these events, it still produces a solid result. So it gives you confidence that we've constructed a portfolio that is very resilient. Again, in the target liability framework, each sub-portfolio or each line of business occupies a different point. Engineering, we are seeking to grow; cyber, for the reasons Thierry mentioned; and credit and surety, given where we are in the credit cycle, areas where we are looking to improve profitability. But even within this set of sub- portfolios, you have further portfolios that sit underneath them. So things like political risk on the credit and surety or political violence on the marine, those will lean more towards exposure management and also depending on which geography you're in here. So we use the framework to really stare where we choose to write, where we choose to allocate capital and to what extent we allocate capital. The specialty portfolio, 86% combined in 2021 and generating $700 million on a pretax basis. The next portfolio I go through is casualty in U.S. large corporate risks. I'm sure the large corporate risk in the U.S. are tired of the industry not showing them love, but it's just the reality of the sort of losses that we've seen come through, social inflation being a big factor there. And we've derisked significantly. So similar chart to what you saw in Thierry's world. But again, here, a distribution of sub-portfolios in casualty overall with our desire to grow in facultative in Asia and in Latin America, where we see very good premium to risk ratios and they remain attractive; while in some of the other areas like motor in Asia, motor in EMEA, you get significant amounts of premium but margins are relatively low. And we focus on trying to expand the margins in those areas. Combined ratio in 2021 for casualty at 105%, which includes 3 percentage points that we bolstered reserves by in Q4 last year. And despite that, still generating pretax U.S. GAAP earnings of $900 million. Clearly, that's driven by the duration of this portfolio, which I think you will have seen in Thierry's slides, and the related investment income that comes from holding all the reserves that sits behind the casualty portfolio. So it's still contributing to economic value that's been generated from Swiss Re. And then I move to the client segment. So moving away from line of business to client segment and, in this case, the regionals and nationals, where we've always sought to grow and we've done so slowly. And over the 5-year period, you see a growth rate of around 7 percentage points to $9.5 billion in premiums now for R&Ms. We expect to continue to grow this segment and want to increase our market share where we know we are lower than our global segments by roughly 2 percentage points, and that will represent somewhere in the neighborhood of $2 billion to $3 billion more in premiums for the R&N space. Balanced portfolio geographically as well as by line of business, but we find this segment attractive because it has lower volatility, and the work that we've done on the cost side makes it easier for us to be able to compete much more in the R&N segment. Cost is a factor for them. Most of the R&M clients are, from an acquisition standpoint, is done through brokers. We do some of them direct, but done through brokers. They seek stability. And because they are smaller by nature, they also look to their reinsurance partners to be able to provide a series of services and solutions for them. So they make a really good partnership with us together with the brokers to be able to serve their needs. So this is why we look at this segment as one that we want to be able to grow. And starting out this year already, we've increased the number of clients that we serve by over 100 just from January 1. The goal for the full year will be to have over 200 new clients in the R&M segment added. So that brings me to the end of P&C. And then I focus now on Life & Health. And in Life & Health, again, clearly the pandemic has been a big factor in the last couple of years. But when we look at our results, the most consistent contributor of economic profits, new business economic profit has been the Life & Health business. And this matters as I will go through in a series of slides in a minute. And where I will also be able to go through, as I mentioned, 3 catalysts that we see that should change the shape of the earnings of the Life & Health business. But first of all, I provide context. And that context relates to the attractiveness of the market overall. Here again, you see the economic profits that we've generated over a 5-year period and our respective market shares in each of the regions. Again, very healthy market shares in each of the regions. Expected exposure will continue to grow, driven by a growing middle class, especially in Asia, but also significant awareness from things like the pandemic. Even though we've paid significant losses, the benefit of that is there's also people who are much more aware and feel they now need to make sure that they have the right levels of protection in place. And when you also look at the shift to economic-based capital regimes, this also triggers demand to us for transactions with our clients. As we saw in 2021 already, we also expect that to continue into the future. For the decade, we expect significant premium growth for the reinsurance market with the highest portion of that coming from Asia. That's a mix of both biometric as well as savings-related products in Asia. Coming to the new business part and the portfolio framework, sitting in different paths, longevity. We put that at growth because we find the price at which you trade longevity today to be adequate, and it's an area where we were underweight for quite a while. So we feel quite comfortable as an area where we want to grow into the future. When you look at mortality and health, you shouldn't be surprised that they are in profits given the pandemic from the standpoint of making sure that you have the right margins. And from a health standpoint, one risk especially for sort of like fixed limit type health products like critical illness, you are also susceptible there to things like medical advancements that can trigger anti-selective behavior down the road. So you need the right levels of margins in the health business to continue to generate good economic profits. But over a 10-year period, 2 things have happened: greater diversification in our new business earnings for the Life & Health business. It was completely dominated by mortality before, but you see the growth in both health as well as in longevity. And the other point being, we have more than doubled the new business economic profits that comes from our Life & Health business. For 2021, that was just under $1.3 billion and over the last 6 years it's been consistently over $1 billion. This matters because the new business economic profit that you generate is what becomes and forms part of our in-force portfolio, and will lead me to talk about the first catalyst that would shape the nature of our earnings into the future. But first of all, the composition of our in-force book has changed, driven by the new business production that we have. So even though you still see mortality in the Americas as the largest proportion, they are by far smaller in proportion versus, say, 5 years ago if -- when we hadn't grown as much in the other regions as well as when we hadn't grown as much in some of the other lines of business. We work very strenuously on the in-force portfolio to ensure that is extracting value. And in 2021, as an example, we generated $90 million additional. This were from things like noncontractual recaptures or rate reviews or some of the work we do on persistency, management using behavioral economics or the deep analytics that our teams do on the models that allows us to be able to release reserves. So these are actions that we take on the in-force that allows us to generate value from the in-force portfolio. The middle chart is one that John will spend a bit of time talking about in this afternoon when he goes through the IFRS deep dive, which is the GAAP margins that you see in our annual reports, and it's this reconciliation between economic net worth and U.S. GAAP shareholder equity. And you can see over the decade, we have more than doubled the GAAP margins. In an IFRS world, where the release of earnings takes a different shape, clearly you're drawing down from a much higher GAAP margins, which will then flow through in terms of earnings. So this is one of the first catalysts that you should see that changes the shape of our earnings moving forward. The second catalyst Christian mentioned, which is the drag on the -- from the pre-2004 U.S. portfolio. Here, we just show you from an illustration standpoint the flat premiums and the significant spike that happens after 20 years. The biggest part of the portfolio was written in the 1998 through 2002 period. So clearly, 2018 through 2022 is when that drag begins to dissipate from the locked-in assumptions that we are forced to use under U.S. GAAP. And our clear expectations in '23 is we will see $175 million more in earnings from the reduced drag, and that grows to $250 million by 2024. Clearly, the other products that we wrote T-25s, T-30s, but they are fraction of what the T-20s were and during the IFRS translation, all of those will be considered through the process. So this is the second catalyst for the earnings -- Life & Health earnings change that I mentioned. And the third, much talked about by Christian, Thierry, is the pandemic, COVID-19. Material impacts clearly [ $20 billion, $22 billion ] -- sorry, 2021, $2 billion, 2020, $1 billion. And so far this year, clearly still material number of mortalities, especially out of the U.S. where we have the biggest portfolio. You all probably will be looking at the same exact charts that we're looking at from CDC and the number of other areas, and you see the material drop off over the last couple of weeks. But our assumption is that the pandemic will move towards an endemic state by the end of this year and the material drag that we experienced during the course of 2021 and '22 will go away, and we go back towards a normalized earnings space for the portfolio. I think it's important to let you know that we just didn't sit down and just, say, "Okay, pandemics are here, we are not doing anything about this at all or we have no ability to do anything." There are a number of things we did, from trying to make sure we reduce the risk, so looking at age profiles, limit profiles, health profiles to determine which risk we should take or not take on; changing the models, and as a result of that the risk premium related to pandemic and our costing to reflect that in our cost; and then lastly, expanding the margins that we expected from the Life & Health business, which generated $250 million to $300 million of economic profit in 2021 and which we expect to continue into 2022. So the impacts has also presented opportunities for us to also improve the economic state of the overall Life & Health portfolio. And this is the third major catalyst for the Life & Health earnings shape to change as we move beyond 2023. And I'll move to the last part of my presentation, which is on solutions. As I mentioned often times in discussions with most of our clients, we go well beyond risk transfer in our discussions with them. The discussions often take the form of how can we help in their regional business, driven by the catalyst of trying to grow somewhere or trying to improve profitability. That growth could be expanding into a new line of business, expanding into new geography or as technology begins to change the nature of their business, they need help on the distribution side or looking at things like insurTech or tech-enabled solutions for their business in terms of acquiring new clients. Same thing on the profit side, using deep data and analytics to be able to try and point out how you improve the performance of underlying portfolio, addressing things like lab session in the Life & Health business using data as well. These are constant conversations that come up. And a lot of the solutions that we've built for ourselves to address some of the underlying issue, we commercialize those. We take those and create commercial solutions for our clients on 2 main dimensions: one, on a risk consulting basis, which is heavily dependent on data and analytics; and on the other, risk assets that are heavily knowledge and tech-enabled. So we build platforms that our clients use. And here, you see the economic profits that we allocate, so this is an internal allocation method that we use in terms of the different pillars to the solutions pillar. So this is business we ordinarily would not have unless we had the solutions that we had in-house and we allocate the economic profits to this segment. Over 150 new clients since 2002 and more and more clients coming in every single day who use one or more of the solutions that we provide. And this recognition through NMG as well of the innovation powers that Swiss Re has. If we look at one of our most famous solutions, Magnum on the Life & Health side, an automated underwriting solution, it's ranked #1 and compared to other reinsurance companies, but also other software providers. So as Christian mentioned, we are not just competing with reinsurance. We're competing with brokers, we are competing with tech companies as well. And there, we still ranked #1 for Magnum. And Magnum helps our clients in underwriting new lives. Otherwise, they would have to spend lots of time trying to train a lot of their folks with knowledge that they don't quite have. We provide this -- into like a technology-enabled platform for them to be able to try and access that knowledge. And in a lot of cases, we also enable it into handheld devices so that their salespeople can bind and write new business at the point of distribution as well. Somewhat similar equivalent solution is CatNet on the P&C side, which focuses on nat cats. Clearly, climate change is topical at this point and everybody is worried about which risk should I bring on, what are the profiles of that risk, how do we manage the accumulation? So CatNet, we provide this as a solution to our clients. They're able to log in, get a good sense of what happens from a risk assessment standpoint for individual risk as well as for their respective portfolios. For CatNet, we have over 10,000 users from almost 1,000 companies around the world who log in to CatNet to be able to determine the profiles of risk that they are trying to take on. And then Impact+, which is another example I'm going to call out, is sort of like our software platform where clients can access and go and access a series of models and analytics tools and over 200 data sources from external sources that they can use to understand and analyze risks in their respective areas. We help them extensively in trying to come up with the end-end solution. And CatNet -- sorry, Impact+, we demoed last year or we debuted last year, not demoed, we debuted last year. And we expect by the end of this year to have over 100 of our clients signed on and using Impact+ as their platform. We show you the economic contribution for each of these solutions. And I think what is super important to also keep in mind is the fact that we generate fees also, not just risk transfer. So when we work with our clients, sometimes they say, "Okay, we'll pay you by giving you the reinsurance." But in a lot of cases, they also -- we also bill them [ cat ] fees, and we will be seeing much more of that going into the future. And the last solution I have here is our automobile and mobility solutions, the ADAS scores. Any one of you who drives, it's not your grandfather's old mobile that you drive anymore. All the cars today are super fuel of sort of like various advancements that tells you how to stay within a lane, how far is the car in front of you, a heads-up display, all sorts of different things. And all of these features generates tremendous amount of data. And we work together with the OEMs with this data to get a good sense of how we match risk ultimately to premiums. And this is the solution that allows us to be able to do that and working together with the OEMs, but also with our partner insurance companies to then come up with products that recognize all of these features in a way that still generates profits for our clients. And in the case of one client that we mentioned here, improved their loss ratio by 3 percentage points. This is an area that will continue to grow in prominence in the portfolio that we have within Swiss Re. And between our solutions and what we do on the transaction side, quite frankly represents the preponderance of the differentiation that drives us as a business model. So those are the things I wanted to talk about. I think in conclusion, ultimately, we want you to know that we are absolutely confident about the business that we have built and the outlook for the business. And we are focused on delivering the financial targets that we've established for ourselves in the course of 2022. So with that, Thomas, I will hand over to you.

Thank you very much, Moses. If I could ask Christian, Thierry and Moses to now join us on stage for the Q&A session. Thank you very much for those interesting sessions. We'll take questions from the room first. Again, if you're joining us virtually and would like to ask a question, please join via the Chorus Call line. And we'll just give it a minute before we start here in the room so that we can make sure we're connected. We'll have another Q&A session the afternoon so you'll have a chance to ask questions on the afternoon sessions then, really focusing on the morning on this one. Iain, go ahead.

Iain Pearce from Credit Suisse. My first question was just on the split of earnings in both the Reinsurance and CorSo divisions. If you could sort of give us a bit of a view over how between those 3 segments of earnings, how that's trended over the last 5 years and how you expect that to trend over the sort of next 5 years? And also in terms of the 3 segments, what the sort of growth rates of those 3 segments are and what that might mean in terms of the different margin trends in those 3 segments for both P&C Re and CorSo? And then the second one was just on the nat cat business and the secondary perils. I think, Thierry, you've previously spoken about secondary perils being uninsurable to a certain extent and very limited appetite in the space. It sounds like there's been a lot of R&D going on here. Has your view changed of that business? With the sort of examples that you cited and the modeling that you've done, is there more appetite there? And how does the pricing that you're seeing on some of those secondary sort of noncore perils compared to what pricing you're seeing in the market?

Do you want to start maybe with P&C Re?

I think you wanted a split between CorSo and Reinsurance.

So I think within Reinsurance, there are 3...

Sorry.

And then CorSo.

Yes, indeed. Between Reinsurance itself, I think the mechanism we showed you is an internal allocation, right? So 60% at core, transactions at 25%, solutions at 15%. What I'd expect is that there will be a greater balance into the future. So I'd expect more earnings coming out of solutions, but also transactions by their nature are a bit lumpy. But we feel a natural spot for transactions to be is probably about 1/3 of the overall earnings. So EBITDA for rebalancing over time.

I think, of course, I don't have the figures with me, but my guess is when we started CorSo as an independent unit in 2012, I would think it -- a huge majority would have been in this first box, right? And the solution side, there was a team there, but it was maybe 5% or so. And then within the core, I would say, a huge majority to the left side, so just the pure access market. So that will be a 10-year journey. And of course, there were some elements that we could use them to grow. And I think it's similar to reinsurance, I think the transaction came first, and we talked about it for 10 years. Solutions is really a big topic since, I don't know, 2015. We had already -- Magnum is 30 years old, but seeing that and saying, we want to upscale, and I think you did much, much more upscale in the last 3 years, I would say, in solutions.

And to answer your second question, I have to go a little bit into the details, but I promise it won't be too much. So we have a -- it's a bit of our forward Swiss Re, we have created this word, secondary perils. And we, I think, as an industry, have labeled it as bad. Now I have to -- my expert team, they don't like it so much, right? So actually, what we are talking about mainly is modeled and unmodeled risks, right? So the primary perils are all modeled. That's why they are kind of fine in our world. But among the secondary perils are modeled and unmodeled perils. So when I said at the Investor Day 1.5 years ago that we have to move, reposition our portfolio, I meant away from the unmodeled. So when you go into frequency, aggregate layers, you pick up a lot of these unmodeled, and that's what we wanted to avoid. All you have seen in my previous presentation, all those many models, we feel actually confident in and we would love to write more of those secondary perils.

Darius?

Darius, KBW. Two questions, please. So you mentioned that exposure to large corporate risks in U.S. liabilities come down by 65%. Is this premium, so how do you define exposure? And then how is current U.S. liability reserve strength compared to what it was in 2020? Is it still within the best -- not still, is it within the best estimate range you target at the group level? Second question, on Slide 25, you mentioned you expect the cat pricing line should continue going up. Does it mean that you expect a headwind from alternative capital growth to somewhat abate? Or you think there will be enough margin improvements even if you assume alternative capital will continue chipping away traditional margins?

Okay. So on the LCR one, it's actually the way we calculate the exposure to large corporate risks. Yes, we have taken a number of treaties and names that we measure. So it's like large corporate risks in the U.S. We track them through our facultative and treaty exposures. And so what we are talking about is the cost exposure to those risks has reduced by 65%. So I don't think we disclosed the number, but we had billions 2 years ago, and now we have 65% less than those today in absolute exposures to these large corporate risks. So that's how we measure it. So it's on a -- the way we measure it is not perfect, but I think it is stable over time, right? We measure it always in the same way. And that reduction is 65%. The alternative capital, I'm happy for my colleagues to add to what I'm going to say. My view is that right now because of some of the losses we've seen, also a bit because of COVID and everything, the whole environment, there is a bit of capacity stock and because of the collaterals that they have to be set. So I think some of it is stuck there. I think the environment also has reduced the confidence of some investors into this line of business. So I think that the flattish growth on alternative capital in '21 might be a bit of an indicator of that generally more cautious outlook from alternative capital. But I do not believe that we should expect a turnaround in terms of appetite in alternative capital. I think they will seek to grow over time and as we will. But it's true, in the recent past, we have seen a bit less appetite. And as I said already last year, that gives actually, again, even better competitive edge to our offering.

Thierry, maybe I'll just add to that real quick, which is I mean on alternative cap, I think if you just -- if you track capital coming in over the last 30 years, you always have this period, right, where it sort of plateaus and then it goes back up. It's for a very simple reason. Exposure continues to grow significantly. And to the extent exposure continues to grow, we also want capital to come in to match up with the exposure, and part of it will be alternative capital. So it's not -- I think '21 is maybe a lower period. But over the long term, we would expect capital to come in.

And Darius, on the reserving question, overall comfort, we can come back to in the afternoon with John. Good, we have someone, Andrew?

Andrew Ritchie from Autonomous. A couple of questions. One is just on the subjects of large quota shares. I mean, you are not alone, in the last couple of years, there's been a lot of growth in very quiet concentrated large quota shares that we all know who they are. I can't reconcile participation in those by Swiss Re or your competitors with controlling some aspects of cat. You've talked about not avoiding cross-subsidization between lines. And particularly, some of those quota shares seem to be picking up a lot of cat because they're quite cat-exposed writers. I think you know who I would be referring to. How do you get comfortable with that? How do I reconcile that? And would that sort of cat element of those quota shares be captured in Slide 47, you didn't talk about it, Moses, but it's in the triangle, this is cat -- quota share at the top of that. I don't know if that's part of an overall quota share. But just reassure me on how you price and think about participation in some of those? Second question, for Thierry. Given inflation, I guess, if I was in your shoes, given there's such an uncertainty in the inflation environment, and I understand the relationships between CPI and claims cost inflation is not, I get that. But it's also a question of duration because some of the CPI elements will filter through. Would you not be striking loss picks? If you thought you were going to report 1 or 2 points of margin, you just think, well actually hang on a minute, guys. This is quite uncertain. Let's bank it a bit more. I'm just trying to gauge your sense, do you feel that might be a prudent -- I'm not asking for guidance, but just as a broad sense. And the final question, we see the positive drivers on Life & Health. I'm just thinking more of the negatives because that's my job. Critical illness Asia, big growth area for Swiss Re. It accounted, I think, for your 80% new business in the region over time, particularly China. You've been prominent as striking caution on that line involved with the regulator. Is there a risk of sort of unwind of some negatives through the in-force in coming years as that book matures and there's various elements in that, that are not particularly what you've said yourself are not great?

Okay. Maybe Thierry, you start with quota shares?

Yes. I'm happy to start. So on the quota shares, it's -- so you say the big quota shares out there, everyone knows. There is -- so there are different ways we handle cat in those. But very generally, we want either nat cat to be excluded or protected by a reinsurance program or simply limited. So that's the 3 approaches. So I cannot go into the details of, obviously, of what has been applied where, but we do not typically accept unlimited net cat exposures in any of our quota shares, which by the way, makes it a bit more difficult for us to grow into that space because sometimes there are unlimited of these quota shares. So that's a general underwriting rule that we apply to our underwriting of quota shares, whether it's the very big ones or the smaller ones.

Sorry, just on -- you still ground up exposure, though. There might be caps, but there's still meaningful ground of exposure. Is that -- which has been a factor for some of them in recent years. You just can't avoid that, you just accept that?

Yes. So that's when the secondary perils on models come in for us. And our discomfort generally, so we have generally a more conservative loss pick than the market because of this uncertainty. So we obviously add for this uncertainty when we choose our loss ratio pick on those, and it does make it more difficult for us. But because it's more attritional what you're referring to, there is much more visibility around the development over time. So attritional loss ratios in nat cat is something you can, in theory, address by a higher loss pick. The question is whether the market is going to allow for that.

But just to be sure you understand, the nat cat exposure in these quota shares is definitely added to the risk factor in the risk model for EVM, for limits purposes, everything. So it's not like quota shares are outside. This is all integrated. So there's an attempt to quantify the cat risk and add it up to the overall limits.

But also a key point here you made on a number of this, the cat -- certain named cats, PCS, indicated cat stuff like that, I exclude it. They're not part of the quota share.

So that would be unique -- say you're on a panel with 3 competitors, you would get differential terms? Or that would be a -- as in you would be able to say, look, we'll participate in this quota share, but we want specifically for our participation or excluding [indiscernible] whatever.

Not on all of them, it will depend on which one you're dealing with. Sometimes it's the same condition for everybody, so not just for Swiss Re.

Inflation?

Yes. On inflation. So it's -- you mentioned the uncertainty, absolutely. I mean we develop a view on mid short, long-term inflationary development, and that's what we apply to our underwriting. I do not believe though that this means that we apply a particularly conservative approach to it. I think we take the best estimate expectation that we have and translate this into the parameters that we then apply to our costing. It might be perceived as conservative. I view it simply as translating our forecast into underwriting.

AOCI.

AOCI. So on AOCI, Andrew, so a couple of things. One is the sort of diversification benefit you get from the Asia CI portfolio over time as you grow to a certain level of value, it begins to diminish. And in that sense, it's no longer as attractive as a line of business to write as much and so forth. That's why you see this sort of like rapid growth and then deceleration in the growth. The second element from our own perspective is just sort of like looking at some of the products in the marketplace, and especially in China and in Hong Kong, which have guarantees -- in this long-term guarantees. And the sort of capital charge, it draws even from the regulator standpoint, it made a lot more sense to begin to move towards shorter duration type products. And the longer duration products with guarantees also exposes you to some of the anti-selective behavior I mentioned, driven by medical advancement. So our way of handling that is by making sure we have a certain level of margin when we write this business, much higher than anywhere else because we know that over time, some of this development will come to in the underlying portfolio.

We have Kamran in the back.

It's Kamran Hossain from JPMorgan. So 2 areas of discussion. The first one is on life reinsurance. I found the nat cat 10-year decade track record of profit is really interesting. What would that look like for mortality, given kind of what's happened in the last couple of years? And then I guess on Life Re in general, I guess, we can see from the results of the industry over the last kind of 20 years, when it goes wrong, it goes wrong for a very long time. So why are high returns not being demanded by the industry? Or is it just the current reporting regime completely the wrong one to look at it through? And the second question, a simple clarification. I think at the beginning, you said 10% ROE. You're kind of happy with that. You've got 30 people looking at what's going on in kind of various parts of the world. I just want to clarify that based on everything you know, 10% still seems okay or it's just -- we'll come back to it next quarter.

So maybe I'd take the 10% and you think about the Life & Health.

Yes, sure.

So I think this is obviously a view we set out how much can be achieved in view of the pandemic. And now the new element is the war in Ukraine, which, as I said, we think is going to be midsized cat loss. Obviously, there's mark-to-market volatility in Q1. So now it really depends on your outlook. Will there be a normalization? Will the market normalize? Will there be more nat cat or can this war be accounted within that cat budget? All of these factors will determine. But if you lay out everything on a piece of paper, the 10% is still achievable. It's just a question of probabilities. It may be a bit harder now, but it is achievable. So I guess that's all we can say at this stage. And it depends very much how things will develop during the year. But we work very hard to obviously get there. So on Life & Health...

Yes, on Life & Health and the mortality, Thomas, you have to tell me whether we can -- whether that's something that we disclosed externally, the 10-year performance of the mortality.

So what we disclosed in the EVM results is the EVM profit from previous year's business. And there, you would see the long-term average, excluding the pre-2004 has generally been in line, Ojeisekhoba, anything you would like to add on this.

Yes. I think that's the main point. I mean, from an EVM standpoint but also from a U.S. GAAP standpoint, if you go to -- from 2015 until 2020, the ROE of 10% to 12% is something that was met almost every single quarter. On a U.S. GAAP basis, it's probably not the best way to report our Life & Health business because it ignores what you're doing on the new business side, which is why I think IFRS will be a much better reflection because it's closer to the economic value that the business also generates over time from our standpoint.

Yes. So when we look at the EVM results, which is what we tend to look at, and IFRS will be better for that. One of the key challenges is the earnings recognition is over a very long period of time, let's say, 50 years. So as we, let's say, doubled the value of the new business we wrote and we're very positive, you only see a slight sliver of that coming through in the actual results. And I think this leads to a depressed view of the Life & Health business. I think, overall, this has been clearly a good business. We're not in worries around that. And if anything, the pandemic sort of confirmed that we knew about it, we had a model about it, we charged about it. So it's the type of net cat you would see, you would expect to happen from time to time, as we said, every 30 years, in the Life & Health business. So all the data we have, we feel it's a good line of business, and we certainly hope that with IFRS, it's going to be more obvious.

And maybe just the last point to Kamran's point, in terms of improved margins, I think that's precisely what we did in 2021, right? I mean, so it's responded to the fact that there's a little bit more risk in the environment. Yes.

And you should see that, by the way, in the EVM report, come through, right, the increase in margins. If you just look at previous year margins in Life & Health, you will see an increased margin in 2021. So that's one you can easily verify.

Any more first questions in the room? Otherwise, we switch to the phone line. Vinit from Mediobanca.

First of all, congratulations on getting a physical Investor Day, and I apologize I couldn't attend. From my side, 3 questions, please. One is on Slide 12, where I think it was Christian's part where we talked about diversification, but what got my is the 12% ROE you reported on P&C Re with 77% at the P&C Re level for nat cat, which is at a 77% combined ratio is a very remarkably low number, I would have thought. I mean, what is -- what needs to happen to get a higher ROE from nat cat? So I know at the group level, you reported 26%, but on the -- just on the top of the slide, the 12%. So that is -- I'm quite surprised at that number because your premiums are $4 billion, and that would imply $6 billion, $7 billion of required capital at the P&C Re level. So yes, of course, it's not maybe the right level because [indiscernible] Life & Health will diversify away, but it's still a curious number for me. And if I move to the second question is probably a bit more simpler. Slide 52, in most respects, probably is about the market share in Life Re in EMEA. Pretty strong pickup in the COVID time, COVID era during 2021. Is there somebody left the market? Or is there something that you thought was more attractive? Or is it part of the theory that you will gain more back from the pandemic? That's my second question. And last question is probably a bit more theoretical in the sense that there's been more cost-focused. And I remember, Christian, from several years of [ ago ] presentations that you always had a number, and I can't remember if was $200 million cost to be moved around or the 2% to be moved around. But is there a cost ratio emphasis? Is it more than before? Is it more new now? Is it signaling something else is changing? Because I mean here, you positioned yourself as good on cost but better on other things. Are you saying that you're also going to be much better on cost? Is it a change? I'm trying to understand.

Okay. I can give it a try on the first one, and I hope I answered your question because the acoustics is not 100% there. I think this is obviously what you see on Page 12. This is using our own portfolio and our target capitalization. So this would be -- and when we look at capital, we would look at the whole nat cat portfolio, and then the 1 in 200-year event is the 100%. And then you do times -- presumably, I haven't thought it myself, but the team has probably done that times [ 2.25 ] or something. So you get to the target capitalization and that's the 6%. Now if you look at real-life examples of pure nat cat players, they are not necessarily have SST, they don't have necessarily the same target capitalization. They might have other means to diversify. So just keep that in mind. This is a theoretical calculation, but I think the relative scale is relevant, certainly for us as an SST player. But I can see the difficulty now to reconcile everything with the combined ratio in GAAP and how this could look like with real-life examples. But I think part of the answer is probably that the capital we underpin here is higher than other players would use. And maybe I'll take the last question also the costs. This is definitely a focus. I think I showed the slide just to show that we have done what I said at the time, 2% to 3% every year we want to take out, but reinvest in new things. And I think that's what we have done, and we haven't talked about it enough. And so I think I showed that because there's clear emphasis now on this performance. There might be less new things we need to invest in. So -- and we have the experience now of how to do that. And so I think you can just expect a continuation of a very strong focus. I'm not going to say more or less, but clearly, this is a very important point. Costs are a very important point. It's one of the drivers of how to get to the 2024 results.

Yes. And for me, I mean, just adding on the cost piece, as I mentioned, our competitors also are focused on it. So it's super important that we continue to do exactly the same. To the question you raised on 2021 market share in EMEA. This is driven by -- I mean, so the market share percentage is a calculation driven by sort of like statutory filings, which is generally different from the economic premiums that you show underneath. And in 2021, we wrote a couple of significant longevity deals in EMEA, which flow through much quicker and affects the market share quicker than you would, I'd say, a mortality type portfolio. So that's why you see the uplift, not because we decide to load up more on pandemic risk.

Thank you, Vinit. Will Hardcastle from UBS.

First one is a quick one, just on Russia-Ukraine. Christian, when you said a 10% share, and I accept there's a huge amount of ambiguity there, and I'm not pinning you to this. But were you thinking there of the total Reinsurance shareholder loss or the total industry loss, sorry? And I know it's vague. In terms of the second question, just thinking about social inflation. It's a really important point that you've reduced levels of exposure over the past year or so by 65%. So I understand you can get more comfortable on the front book. But really, I guess, the question is on the back book. Presumably, this will take maybe 5 years or so for any comfort of the action to begun -- to become evident from a reserving side. I think the paid development less than 50% still at that point, and it's certainly less than 10% after 2 years. I guess what comfort can we start to take on the back book action that you can give us today?

Yes. Okay. I'll take the first one. Thanks for asking. I'm really happy you asked because it's very important. I meant the reinsurance, we have 10% share of the reinsurance market. So that will be a part then of the overall loss. And I'm not making any prediction of how much it's going to be in insurance and reinsurance on this case. But medium term, nat cat losses, just to give you a sense, there is typically half is with the insurance space and then half is with reinsurance and then we have there our market share. But this is obviously a more complex loss than all of that. But yes, it's definitely meant to what I said is approximately our 10% share of the reinsurance part.

Inflation?

Yes. Will, you're absolutely right on social inflation that with every year of new business we write, we will see the higher expectations that we apply to our new business underwriting flow automatically into the reserve. So you're right that over time, that obviously will improve automatically the reserve level. But your question was very specific on the back book, right? So we obviously have to take actions as well on the back book, and we do. We have to do that in the same differentiated way. I was mentioning not every line is exposed to the same type of inflation. We have to look at short term, long term, and we do make all those adjustments as actually these things occur.

Thank you, Will. We have Thomas Fossard from HSBC.. .

Maybe coming back to your Russia exposure. Could you say in your reinsurance contract, you've got some specific wording whereby you have some limits or sub-limits or preventing the losses to balloon up. I'm clearly thinking potentially of maybe the aviation lessors that you've been insuring or reinsuring, which will potentially isolate you a bit from big losses. The second point would be on your appetite for nat cat. I can see that actually your point, saying that actually the risk pool is growing, we're confident with profitability, we're a smart underwriter. So I can understand the direction of travel. But could you say how much growth you're expecting or possibly if there is a limit in terms of risk appetite at [ 33 ] measured as a percentage of your economic capital and how fast you are from reaching this kind of limit?

Shall I start with the first? Thomas, on the wordings, you have to differentiate not surprisingly between the primary market and the reinsurance market. So in the primary market, indeed, we do have different limits. There are sublimits. There are separate wordings. So the whole thing is very differentiated. But what you say is absolutely correct. So depending on what the loss trigger is, there are different limits applying on the primary business. So in reinsurance, we generally follow the fortune of our clients, but there are specific contracts with specific limits as well and aggregate limits that apply. And we also partially have specific event definitions defined on the reinsurance side that is again putting a filter between the primary losses and the ones we would ultimately take up.

Nat cat?

I'm happy, on nat cat also to -- Moses, do you want to or shall I start, yes? So I think, Thomas, your question is mainly with regard to risk limit because I said we expect the market to grow by another more than 7% in the years to come. And I said why? And Moses explained why. And of course, we want to grow in line with that or more if the price levels are good. And then you rightly asked the question about the risk limit, is our balance sheet big enough? And this is really where Christian mentioned it, ACP comes in on the retro side, where some of these risks can actually be transformed. And Christian maybe correct me, but the way I see it is as we actually see opportunities to grow our business on a gross basis because of our distribution insights models, understanding of the market and so on. I absolutely see the potential to have investors aligned to that success through ACP and actually continue to grow on a cost basis whilst actually controlling the net, while we retain net much more so going forward. No correction.

Thank you, Thomas. And with that, thank you, Thierry, Christian and Moses. We'll break now for lunch and then reconvene in an hour at 1:30 Zurich time. And then again, we'll have a Q&A session in the afternoon too, to answer the second batch of question and any remaining questions you have also from this morning. Thank you very much and see you in an hour. [Break]

Yes. So hello back, everybody. I guess this is the most difficult slots after the lunch break. I hope everybody comes back strongly. And I'm definitely strong and energized because I think we've got a good story to tell. As I spoke to you 18 months ago, I think, the last Investor Day, we were promising a lot, we were giving you status updates, and I think what I would hope you can take away today is that we delivered on what we promised. And if you look at the course of story in 2019, it started with the year of the fix it, we called it. Then we went into 2020 as we were executing basically on all actions and waiting until it's earning through, we said now it's the year of smart circle, we called it. Smart circle is about setting the foundation for future profits, future growth in a more sustainable basis. That's what the year 2020 was about. And then in the year 2021, we said now we need to look after our franchise building towards brokers and customers, that's why we called it the year of the customer. As we then went towards the end of 2021, we saw that the earning patterns really were proving that the actions were the right ones. So the full year result was $578 million net income. That was a significant contribution to the group net income. So that was really a proof point of confidence that was -- those were the right actions. Now going into 2020, we declared it the year of the confirmation. So we will confirm what we delivered. We'll not get too excited because the market is hard out there. It's very difficult, very volatile. There's a lot of external factors that trigger a lot of actions internally in order to stay on course. That's exactly what 2022 is all about. And I would like you to take away, or I hope you would take away during today's presentation the following points: number one, we are integral part and confirmed integral part of the Swiss Re Group's strategy. I think that's a very important point. And Christian was also referring to the fact that CorSo has not anymore it's stand-alone underlying balance sheet under the group. It is actually integrated. We're an independent segment of the group, but we're leveraging the group on the capital side, but not only on the capital side, and we'll come to those points a bit later. But also I would like you to take away is that we have successfully concluded our turnaround. I think that's done, that's a tick in a box. But I think it's an important experience. And I don't want people to forget about this. So every new entrant in our company, we try to remind them where we were coming from because very quickly, you can find yourself in the same spot. So I think that's something I would like to address today. And then secondly, I would like you to see and feel that we are operating in an attractive market. Christian was saying $930 billion market with a 4% to 5% growth. It's an attractive market. If you scale it down and segment it properly and look at our targeted -- attractive target markets, that's $250 billion. That's a lot of space for us to look into and not to get distracted. We could focus very much on the areas where we feel we can differentiate and also add value. We also invest into people and into resilience. So the portfolio aspect is very important. So the forward-looking shape of the portfolio, the mix of the portfolio is something I'm going to address. And obviously, the differentiated propositions that we have is very important. Christian was mentioning the international insurance programs. That's something we're also going to touch today. Now I don't want to go through the walk, what I call the walk to profitability again. But just to remind people, we came in 2018 on a normalized basis from 110% combined ratio. But I think the important part here of the slide is the right-hand side, the tick boxes. Those are the things that we were addressing, and that's exactly what you see here in the walk. So we started with the portfolio remediation. We took out roughly almost $800 million of gross written premium, U.S. dollars. And this obviously was not only the big U.S. casualty part on the large corporate side, but it was also areas where we subscale or areas where we believed we cannot make really any money on a more sustainable and structural basis. Those were, for instance, general aviation. Those were marine cargo. In the traditional way, marine cargo is underwritten. And now we have revised the way of underwriting marine cargo and other lines of businesses. We achieved our profitability targets. Remember, initially, we said 98% combined ratio for 2021. We revised this when we came out with the 2020 full year numbers, and the outlook was then better than 97%. And you've seen we've achieved, on a normalized basis, 95% reported, 91% combined ratio. With this, we positioned ourselves into top bracket of the performance -- the carriers that performed very well, including companies like Chubb, for instance, who very often are used as a benchmark. We also think that we have a very adequate reserve position. We addressed it, and you can see it here on the slides also. In 2019, in particular, we took a big hit, but I think it has proven to be the right thing to do. You saw a significant prior development last year, but that was really due to, and we had that question in the -- during the lunch break, due to the inactivity and during the COVID phase, no production, no losses. So that's exactly why we had then these prior developments that you have seen. This will be seen how that develops. And obviously, we can't talk about the numbers now. So in overall, we also reduced the earnings volatility, and that definitely was due to a healthier portfolio, a better diversified portfolio. And in particular, buying proper reinsurance, protecting our book, and I can talk about that a little bit later. So we feel very confident that with this, we will be better than 95% combined ratio in 2022. And this is not on a normalized basis, but on a reported basis. And I think that is also, for internal reasons, a significant shift that gives people the confidence that we are on the right track, but it's also cautious remark internally to say, keep the eyes on the ball and be disciplined and -- otherwise, we will fall back into old market behavior. If you look at now how -- I'll dig a bit deeper, we look at the portfolio split by line of business, but also then the regional split. And if you remember, 18 months ago, we said we need to really reposition the overall portfolio mix. We have reduced significantly on the liability side. That's definitely the U.S. portfolio pruning activities that we had. But you see the property side grew significantly, and this is a nice story because the rate increases we could generate in property was so healthy so that we also invested into that line of business. We hired a lot of people to join, in particular, on the EMEA side with very, very healthy rate increases on an even risk-adjusted basis. And you see here, accident & health had a significant increase. And if you look at the overall number, we took out the elipsLife book, which we sold at the end of last year. But within the elipsLife book, there was one element that was the Irish Medex book, which we had before elipsLife was created, and that's a very healthy book. It's complementary to our A&H book overall in CorSo. And this we increased. That's why A&H goes from 15% to 20%. A&H is a diversifier in the book, and I'll come to the effect of A&H in the overall portfolio. That's why the A&H numbers are quite high. If you go to the regional split, you can see that EMEA made a significant jump. It's not only due to the Irish Medex book, but it's also because we had significant growth and rate increases, new business and rate increases in EMEA. U.S., we repositioned. It's underweight at the moment in comparison to previous years, which is intentional. And remember, we had exactly the same slide at the Investor Day presentation before. Now this needs to be confirmed. That foundation needs to be stable. And that's why we are addressing, on the one hand side, the technical underwriting excellence. And when I say underwriting, it's not only the underwriter as a job family, but also claims and also on the reserving side. Then we go into the reinsurance protection, that's something that we are very closely watching and obviously, expense management is critical for primary insurance, in particular, also on the corporate insurance side. You have a lot of businesses and lines of businesses that have a low average premium per policy. And here, we can't afford to handle them on a very manual basis and that's why we need to bring it further down by improving productivity, introducing data and technology but also balancing our portfolio right. If I start on the left-hand side, that's what we call the smart circle. The smart circle basically is based on analytical data model, very data-led, insights on the costing gaps, addressing costing gaps, addressing A versus E gaps. And this is something that existed before, but we were not really as consequent and as integrated as we should have been. This is very important because every quarter now, we look at all the trends that we see and spotting the trends and translating them in actions and addressing the costing, for instance, if there's a costing gap. That's critical. And to have that speed is very important in the market, otherwise, we'll fall back into that vicious circle that we had in previous years. Secondly, on the Reinsurance side, you see that we have significantly reduced our net retention. Just to give you an example, on the nat cat side, we dropped from $300 million to $200 million. And then in the other lines of business, as an average, you can see $35 million. It varies by line of business, but we came from a very high $75 million. And casualty, I can take out as an example, the $75 million attachment point led to most of the claims being really under $75 million. So we had inadequate reinsurance cover. So all losses were picked up by us, and that's something that was not even market adequate. If you looked at comparisons in markets, peers, they all had lower attachment points. So we are in casualty now at $10 million, just to give you a feeling. And on property or Credit & Surety we are at $35 million, a drop down from $75 million. Then on the expense side, as I said before, we did our homework. We reduced our expenses by $150 million in 2019 with our management actions. The good story is that we reinvested $100 million into strategic initiatives, into growth cases like property, as I said, but also into tech, into future business cases that obviously will help us to differentiate further in the future. Now all of this is based on a strategic investment into learning and development agenda. I think this is so important, and it's never really been emphasized. Since 2019, we had 1,500 leave us. And at the same time, we had 1,500 join us. And if you look at the composition of the joiners, 50% were coming from the primary insurance market. So we really shaped the company, the employee structure into a real primary insurance capability. And at the same time, we also looked at forward-looking capability needs in future. So the data and tech aspect was also emphasized so we have 10% joining in tech and also analytics and innovation areas. So this all happened in the last 3 years and without any disruption. We haven't seen anything blowing up in news or wherever. And at the same time, we have seen a very significant increase in customer satisfaction and broker satisfaction. So the NPS is market-leading. We'd like to stay there. This is a very significant increase to 2020. The overall NPS is 35, that includes the broker and the customer NPS. If you look at really the managed accounts where we are very strongly engaged with the client directly and together with the broker and the tripartite relationship, that even increased to 55. This was partially due to COVID because we have addressed all the difficult actions prior COVID. And then during COVID, we could really focus on really staying very close to the customer and addressing really their needs. So that's very, very positive and gives us also a unique differentiation here. If you look at now Christian's slide, he subdivided it into core and differentiated, and I'd like to pick up on this. But if we go to the left, we would like to maybe quickly highlight who the customer base really is. Remember, we mentioned it last time also that the customer base is the corporate universe, and we really wanted to really understand who is that really? So we really made a very deep dive into it. Globally, we have 40,000 corporate groups including affiliates, so that's groups. And those 40,000, we analyze them in 32 markets and markets where we are operating. We looked at the premium size, the wallet size, and we think that's roughly $250 billion. So again, attractive market pool, sizable market pool. And then we looked at properly segmenting the customer base along what industry they're in, strategic fit with Corporate Solutions, but also with the Swiss Re Group, for instance, from a digitalization aspect, sustainability aspect and also forward-looking aspect in the sense of are they a growing industry, declining industry, et cetera. And then we also looked at the midcorp market, and the midcorp market is typically very broker-heavy. The top end, the large corporates are brokers where brokers are servicing the customers. So there's much more direct access to the customer base. And on the differentiated side, we said we cannot be a me-too everything to everybody, and a me-too. That's why the differentiation is very important. Here, the differentiation is in international insurance program. So we -- as Christian explained in the beginning, we dropped down from a very wholesale-driven business where you were very anonymous didn't really have a touch point to customers directly. And you could have been exchanged very easily in this wholesale market. So then we dropped further into lead positions in layers, upper layers, but also drop down in primary layers. I think that was then the next phase. And then as you are in the primary layers and look at the customer needs, they need international presence, they need international capabilities, primary lead capabilities. You need to have top class risk engineers who can understand the companies and their risk profile and then translate this into underwriting. But also as the market got harder and insurance companies were increasing their rates, the corporates were looking for alternatives. And here, the innovative risk solutions part kicked in. That's a differentiation you'd find only maybe in a handful of companies who really can do at scale parametric insurance solutions. That's something where we are market leading. And we mentioned already today, the risk-related services is an aspect that we're investing into heavily. And that obviously gives you stickiness, but also addresses the diversification of the book. And if you go to the core, there you can see, we needed to have an improved diversification of the book. We needed to have lines of businesses that are not correlated to the property cycles, and we needed in overall, address and manage the volatility. How are we doing that? We have -- based on the target liability portfolio approach that Thierry for the group has elaborated on. We now go at 1 level deeper, lower into the business units, Corporate Solutions, we look at the restored healthy portfolio after the pruning. And then we look at, for instance, rate developments for the few scenarios that we played and we think the rates will not hold. We think we have rate adequacies in certain lines of businesses that we achieved already. So we might see moderate or plateauing great situations, but also in certain areas, we will see declining rates. So that's why we said, how does our portfolio behave if you look at the combined ratio targets that we want to achieve and then obviously also the ROE that we want to achieve? And then we said, okay, we've got a very heavy property book. We're fine with this. We love property. We know what we do. We have really first-class expertise in property. We've got data. We can manage it. But it is a very volatile book and that needs to be addressed. So we looked at sublines of businesses, and we have selected here 6 sub-portfolios that we now focus on. It doesn't mean that we're not growing in the other portfolios. But here, we're focusing on those portfolios because they help us to address the geographic diversification. If we look at economies of scale, we have some portfolios that are still subscale, we need to grow them further. We love the portfolio, the risk, but we need to grow them further. And then also, we look at portfolios that are de-correlated with the property portfolio, for instance, Credit & Surety or accident & health. And this is why we have listed them here. We are aware of all the situations in the Credit & Surety market as we speak. But the Credit & Surety market is a market where we have proven very good cycle management. As it came to a downside -- downward cycle, we were addressing it. We reduced limits and capacity, and we're holding back. And as we see opportunities, we are there, we are market leaders behind financial institutions, an area where we generate high margins. So we love this line of business. And General Liability, I would like to highlight, it's excluding U.S., so we're not reentering the U.S. market as we were in the past, but we see opportunities in EMEA, and we need, if we call it, P&C company, we don't only have to have the P, but also need the C. And we have a business case approved to invest and to expand into EMEA, but also Asia, but EMEA will be definitely the bulk of it. Executive risk and engineering construction are obviously also lines of businesses that we very much look into it and see growth. Now overall, we're coming -- if you look at the 6 sublines of businesses, sub portfolios, they represent 57% of our current book, and we would like to grow to 70%. So that's sort of the order of magnitude that you can look into as we now report out in future. And I'll give you just 3 examples. And A&H, this is typically the U.S. employer stop-loss. It's a niche market, very attractive. Lower margins in comparison to maybe at the moment, the property book, but very smooth, very steady. So it addresses the volatility that we have in the property book, and it also reduces the average expense ratio. This is much more standardized business. So we're investing into it. We're investing into IT upgrades. We are looking at portfolios that we add. So we have taken over a TMS Re, that was a specialized MGA. So that's now part of our book and part of our team, and we will definitely see further additions in this part of the business. Property. I've spoken about, 50 people we have added to our company, not only in underwriting but also in loss control engineering, claims, operations, et cetera. And the people that we hired are exactly the ones that we're talking about with the capability skills of a primary lead company, and Credit & Surety, I was already talking about. Now if I come to the differentiated part of the business, one example, and I think that's the most prominent one where we have really demonstrable success. This is the international program part. If you look on the left-hand side, this is really what the customers need, what they're looking for. And interesting enough, you won't find the word underwriting here because the floors in the market and in most companies, you will see is the deficiencies on processing, on administration, on customer service, et cetera. So it's a very complex part of the business. That's why the entry barriers are very high. And we can be very proud, as Christian said, that over the years, as we invested into it, we could really unlock this segment. And not just be a me-too, we really change the way we underwrite and process international insurance programs. So we see, on the right-hand side, the development. So we had 323 programs in place, and we came typically from the mid-market with less local policies or countries that people operate in. But now we felt confident enough that our systems are robust, that our services are good, that the platform works now that we -- now we are in a position to even take over very large accounts. You have probably seen some of them in the announcements, very large companies with 100 countries and where we have to issue policies in 50 countries, for instance, and that all is centrally managed and all supported by this database. So that's the proposition that we built for ourselves. But we said, why not making it available to the market. So we think that the network that we have is very competitive, comparable to the networks of all the large incumbents. And the platform that we have addresses not only our issues but also industry issues. So we said this PULSE technology that Christian was mentioning in his partnership slide, this is something that we white label. So we have more and more insurance companies that are interested in that purchase, exactly that platform. And we have also brokers being interested in this. So it could be developed to one of the standards in the market, which I think we can be very proud of as the developer of this solution. Now in summary, what I'd like you to take away is that this is the year of confirmation. We'd like to confirm what we delivered. And we see it here also with the better than 95% combined ratio. We'd like you to see that we confirm that we steer our portfolio properly, that we have invested in the right franchise and people and also would like to see confirmed that we are an integral part of the Swiss Re Group and contributing obviously continuously on the good results. Thank you. Christian, it's yours.

Thank you, Andreas. And it is now my pleasure to use 15 minutes to give you a little review of iptiQ. We are quite enthused about that. But I acknowledge that for most of you, iptiQ at this stage is mostly a cost line. So I wanted to give you a little bit more insight at this stage. So as you know, iptiQ is our global B2B2C digital insurance business. It's basically a white labeling business. And as such is probably, as far as I know, the only stand-alone or white label. There's some traditional insurance companies who offer white labeling as a service. But in terms of independent business-to-business-to-consumer, digital insurers, white labels, I think we are alone. And if not, please tell me because I'm interested to talk to the others. So why just this segment and since we're quite alone there? And the reason is, as you had this whole tech hype for the last few years, we looked at dozens of ideas or probably hundreds of ideas. And the one that everybody is going to one of those, that people are going to is basically direct to consumer. It's much more se**. So you say we're going to improve all the processes, we're going to do good underwriting and we go directly to the consumers. But we saw that this is a very -- sorry, it will be problematic for Swiss Re because we would compete with our clients, but not just that, it is clear that the sales process in insurance is actually quite hard from a human psychology point of view. So we have a whole set of psychologists who know around the human behaviors and buying insurance is still a very -- you cannot hope to produce a much better product online and hope that everybody will go online and buy your product. There's a high hurdle. And so basically, this is what now start-up in the D2C space are encountering, they all go, people don't come alone, so they have to spend on marketing, and then you have to auction ads on Google. And because everybody is auctioning ads on Google, it is extremely expensive to acquire clients in the digital way. Actually, it's significantly more expensive than to have agents. So we, from the beginning thought we're going to stick to this business to business because that's really our DNA and how we operate to consumer part of this -- of the digital space in insurance. And we build it up over several years now. So at this stage, we have Life & Health in the U.S. We have Life & Health and P&C in the EU. And we have a new venture on P&C in China, and we have Life & Health in Australia. At this stage, 1.6 million policyholders, 723 million of premiums -- gross premiums written and a good growth trajectory in the last 3 years. So that's become something much more significant for us. Now what's the unique USP of iptiQ. And I think it's really the combination of the strategic assets of Swiss Re as a group plus some new assets that are more in the digital space. So for iptiQ to be successful and attract some of the brands, I'll show you in a minute, it is important that we're part of the Swiss Re Group. So the global reach and brand is a big attraction point. We don't have a primary brand also, so we're not competing with any other brand. We have this client collaboration and access. So this is the Reinsurance clients, the Corporate Solutions clients. Capital strength is here and risk knowledge leadership. So it is obviously very important for any client we have for iptiQ to be sure that whenever we have a claim, it will be paid and that we're in here for the long term. If iptiQ was standalone, I think it will be significantly harder to acquire some of these clients. But iptiQ is also a start-up with a very vibrant atmosphere. They have their own subculture, they're separate in our organization. They're very digital native, cloud. It's sort of a mobile-first platform. So they are very advanced in everything that's technology. They're used to work in an agile way. There's fast launches, quick scaling. So if clients want to come on board, it's typically 60 days to be onboarded. And then user experience and customer obsession is really at the heart. So the psychologists that I talked about, the behavioral psychologists are used to working with iptiQ for a long time. So we have developed all the system, the questions, the layout, everything is optimized to basically get more straight-through processing. So having -- not losing as many people on every step of the process as others do. So I think it's a very compelling proposition. We have grown 50 to 51 distribution partners by now. So lastly, we were able to onboard 11 partners. And there's different types of partners. There's -- if I start on the top left is the corporates, like [ IKEA ]. They know typically, they know us through CorSo, that's where the contact was created, and then we work with them. For them, it's typically an ecosystem play. They want to add insurance to something they already have. They're not used to sell insurance, so sometimes this typically takes longer to get to scale. But I can see an enormous interest in the corporate community around being able to have adjacent surveys and sort of a plug-and-play solution. Then the next sector is insurers. So we feel still a bit underutilized here, I have to say. We have this excellent relationship through reinsurance with a lot of primary insurers. They're all investing in technology. As I said before, obviously, the biggest ones will want to do this digital transformation on their own, or many. But there's hundreds of companies left who would benefit from a collaboration with us by either having us do certain countries or certain line of business or using our systems. So there's different ways we can cooperate. And in my mind, this is a very natural and logical and economic solution because otherwise, they will all have to spend hundreds of millions that we had to spend, and we have several years of experience and 51 partners. So our learning cycle is just going to be probably faster than if you have to do it stand-alone. Then you have the insurance intermediaries for whom this is very natural. So they have to use their own brands to sell a product. So it has been popular with that group of people. And then finally, banks where this is quite established to work with primary insurance companies. At this stage, we're quite cautious because the banks have a way to auction these things, and they work very much with a lot of our clients. So we try not to compete head-to-head with everybody in that segment, but I would think that over time, banks will be also a very natural partner for iptiQ. These distribution agreements are typically 3 to 5 years. But the clients don't stay forever, you would expect some turnaround over time. But overall, the interest is huge. The pipeline is full, and I can see no way that we will be able to integrate everybody who would like to on the platform. So iptiQ is in the envious position to have too much interest at this stage versus the bandwidth we have to integrate partners. So iptiQ is growing dynamically, and we tried also to -- or we do monitor in the performance culture compared to their main peers. So I have a list of peers here, we're watching in the InsurTech space. So if you look at the gross premiums written, we grew 85%. The peer group we looked at was 72%. So iptiQ is growing very similarly to this class of new start-ups in the digital insurance space. But then what is obviously super critical is, how your costs grow. And here, we had a much lower growth. We grew 12%. And the comparison there with peers is, there they were 78%. So for a lot of peers, also because they are not exactly in the same segment, it is very difficult to contain the costs and after-cost's significantly lower in terms of that growth trajectory than the top line. And then we now have something that comes a bit from that space. So there's adjusted gross income and things like that, that pop up in the space, but the intent of these measures is basically to measure whether you make money with the policies you write before you take into consideration the overhead costs. So it's just purely on everything you need to sell these policies, do you make money? And iptiQ is making money. So the combination of all these 3 factors means over time, if we can continue on that path, we will have a breakeven. And that also contrasts with some of the peers or the peer average where this measure is actually below 0. So where it's very hard at this stage to make an underwriting profit. Again, many are direct-to-consumer, so it has to do with these very high costs to acquire consumers. So we show all of that to give you a sense of how we see ourselves in that space and that we are optimistic that with what we have and the trajectory we have, we can achieve the breakeven. So the next few years -- it's going to take time. Every startup in that space takes time because you need the upfront cost, you develop IT systems and then you need to acquire clients, et cetera. So it takes its time. And every time you start a new one of these branches, it delays it. So we started Life & Health in EMEA first, then we went to Life & Health in U.S., then we started P&C in EMEA. So all of these ventures have delayed it so far. But at this stage, we don't foresee to expand much further. But now it's really this path to profitability. So it's a question of growing -- continue to grow the top line. It's also the margin uplift from portfolio maturation. So in the Life & Health space, even if all of our clients, all of our partners were to have 0 growth, so just continue to add the same number of policies every year, the portfolio would still grow because a lot of that is multi-year premiums in Life & Health and so you just have a natural increase just from -- even at 0 growth of sales. And then the other element is this cost discipline I talked about. So hopefully, this gives you a high-level sense. It's still a small business, obviously, in the overall Swiss Re Group. And as it becomes bigger, hopefully, there will be more and more disclosure, but I hope that this was useful as an intermediary stage to give you a sense of how we see this business. So with that, I hand over to John.

Thank you, Christian. I've got a couple of different topics I'd like to bring the group through here in the next half hour. The first is just a reiteration on capital management and a bit of a discussion on the EVM results which we released in March. Secondly, the transition to IFRS. I'd remind the audience that as a U.S. GAAP reporter, we will actually continue to report our earnings under U.S. GAAP in 2022 and 2023 and not move to IFRS 17 until 2024, a year after most of our competitors. At this point of time, we've done an enormous amount of modeling on what the impacts will be, and what we're sharing with you is some of the strong indications from that modeling. The precision on the figures is to come. And over the coming quarters, I'm sure we'll share much more with you along the way. Last, a couple of pages on alternative capital partners, the ACP team which, while it serves primarily reinsurance today, is pretty fundamental to the way we think about our capital management. I'll discuss that a little bit, but also give you a sense of how dynamic a team this is and the expectations we have for a continued important contribution to the group from that team. So let's start with capital management. Christian, in his opening remarks, reiterated the position on the right that our priorities have not changed. What we released in March was the final January 1 SST ratio of 223%. You see the capital strength remains in place, rebounding a bit from the pandemic-inspired decline to 215% the previous year. This largely comes from an increase in economic earnings in spite of what remained a fairly low interest rate environment. You'll see in the very back of the deck, we give the sensitivities. One of the things in the first quarter of 2022 has been this increase in midterm interest rates, which probably -- or not probably, unambiguously as a stand-alone item, will have a positive impact on the SST ratio as we start the year. You also see that the combination of SST target capital and the available capital both increased year-on-year. This is consistent with writing profitable new business covered in the way that we think the capital continues to be very strong for us. The one thing which -- questions came out after the year-end results was, why have you held the dividend stable, if, in fact, your priority is to grow the dividend? I would just reiterate where Christian's positions were this morning. In the first case, to remind people that in 2020, we actually had an economic loss. In spite of that economic loss, we maintained the dividend because we think that's massively important to our shareholders. In 2021, we rebounded to a strong economic performance, but we also saw continued headwinds from the COVID losses we expect in Life & Health Re. We signaled the dimension of that, that's why the earnings for Life & Health will be muted in 2022. In spite of that, we thought we can maintain this dividend again at CHF 5.90. That was actually not very much in debate. And the question is, do we increase it now or do we grow it in coming years? And our view was that this uncertainty continuing coming from COVID would be a more prudent way to manage this to deliver the CHF 5.90 in April of 2022 with the idea that if we are able to be successful in the 10% ROE or somewhere close to that, the growth of earnings should be able to grow the dividend in future years. One technical point we'd like to introduce to you today, the Swiss corporate law is changing in a way that's going to allow us to migrate the payment of a dividend from a Swiss franc dividend to a U.S. GAAP dividend. This is consistent with the functional currency of the group. This is consistent with the way that we report all of our results. For those of you who are Swiss-based shareholders and are interested in getting a Swiss franc dividend. The SIX allows that to be paid with a spot rate conversion on the day of payment. So we're not going to have -- create a problem for the people that are interested in Swiss franc dividends, but we will price this on a going-forward basis on a U.S. dollar basis, consistent with our entire accounts. Back to EVM. I mentioned a strong rebound and the profits related to economic net worth, the contribution moving from a negative $0.4 billion in 2020 to positive in $3.8 billion in 2021. This rebound is because of the strength of the underwriting both in Life & Health and P&C. What we see is over the 5-year period that we represent here with the COVID losses included an average of $2.1 billion of those 5 years. If you exclude the COVID losses, the result would have been almost $3 billion for the same period. The main 2 drivers of that are the new business profits. And here, again, you see a rebound in those new business profits after 2020 into 2021, the pandemic's impact muted and overwhelmed by the strength of the underwriting performance, both in P&C, but also that improved margin that we saw, thanks to the pricing actions on our Life & Health business in 2021. And then the consistent release of the capital cost year-on-year-on-year. And those are what's driving the new -- not the new business only, but the profits on an economic basis for the group. That's why we think coverage of the dividend is not an issue for us. We're able, in fact, to continue to demonstrate these economic profits, and we look forward to the continuation of that in 2022. And as we do that, it's massively important for the next section I'm going to get to, which is what does this mean or imply for our IFRS results? On the right side, some other dimensions, just to remind people. The previous year's business in this period was actually negative. Normally, we would expect that to be much closer to 0. But because of some changes that we made in 2018 and 2019 or 2019 and '20 on the cost of capital. And importantly, because of the major reserving actions that we took, both in Corporate Solutions and in P&C Re, that number is actually negative for these 5 years. We would expect that to return to some sentiments, as I say, of plus or minus 0. At the same time, our asset management team has done a spectacular job of outperforming what might be expected to them. This is -- again, is on a risk-adjusted basis, this outperformance of over $600 million per annum for these 5 years. The other part, again, taking the capital generation between 2017 and 2021. If you walk through this step -- these steps, in the first case, over USD 10 billion of economic earnings since 2017, more than covering the dividends that were paid out over the period. Earlier in this period, we were also engaged in share buybacks, and that's why item #2, the -- what was delivered back to shareholders is a little bigger than those economic earnings because of those buybacks in the earlier years. What we see is the capital deployment was reduced over this entire period even if in 2020 and 2021, we were able to deploy more capital in part because of the opportunities we saw in the environment, both in P&C Re and Life & Health. A few other small changes along the way. When you look to the bottom part of this chart, that capital deployment on the adjustment is now very clear that that's where we were writing the new business and required -- the capital required is different than it might have otherwise been for you. We're very comfortable with the current position at [ 2 23 ] again in this environment. And as I said, at least for the moment, the increase in interest rates and the relative benign behavior of credit spreads means that this is probably net positive for the development as we start the year on SST. So the -- we've talked in a couple of different places today about the DNA of Swiss Re. One of the places that DNA is formidable is in the context of understanding the economic impact of the business we write and the way that we book and manage the in-force of the business and the way that we ultimately show the profitability. We introduced EVM in 2004. We started publishing a few years later. We transitioned the whole group to U.S. GAAP from Swiss FER in 2006. We introduced SST, an economic-based capital framework, in 2008 together with the -- under the guidance of FINMA. And in 2024, we're moving forward to bring IFRS as the reporting standard for the group. IFRS is going to give us an economic standard much more appropriate for the businesses we write, we believe, than U.S. GAAP has. We also think that there is a chance for a greater harmonization, not only with the 48 legal entities in Swiss Re -- the 18 jurisdictions will have to use IFRS 17 for their statutory results, but with all of our major competitors, who will be on the same standard, actually 12 months before us. You're going to see me talking about IFRS, the economic framework, on a couple of these slides is landing between the U.S. GAAP position and the EVM position. The differences in earnings recognition and actuarial assumptions and discounting and capital cost are significant. But they're actually more significant between IFRS 17 and U.S. GAAP than they are between IFRS 17 and EVM. We believe that our overall balance sheet is unlikely to be greatly affected by this shift. Under U.S. GAAP and under IFRS 17, there should be a reasonable coherence in the size of the balance sheet. We believe that our P&C businesses are unlikely to be very different and the earnings they demonstrate on a yearly basis. Where we expect a different earnings recognition is largely in our Life & Health businesses. And again, this is all based on the work we've done today, which is modeled work. It's not the precise work that we will have towards the end of 2023 going into 2024. We'll actually show these numbers under IFRS 17 exactly 2 years from now. But the indications and the work we've done give us a high level of confidence that directionally, this is what -- where we're going to land. And we've actually disclosed a nontrivial amount of information that's relevant here. Over the course of the last 10 years, Moses made mention that this U.S. GAAP margins on our Life & Health book have almost doubled in size or actually more than doubled in size from $13 billion to $27 billion, and we report this externally. You've got it in the documentation that came out in March. Year by year, you see that the EVM and U.S. GAAP earnings are different, but systematically, EVM is higher. The last 2 years, both there impacted materially by the pandemic. In 2014 and 2013, there was these adjustments that were made of where we took the losses related to the restructuring of the U.S. portfolio related to the famous pre-2004 portfolio. But overall, we've been able to build an important margin in U.S. GAAP. And the reason this matters is because it means in the in-force business of a franchise, which has grown in size on a U.S. GAAP basis, premiums written by more than 60% over this period, that we will have an in-force capability to manage through the transition on IFRS and bring a different profit pattern to bear as we report our results. What does that look like? Again, that $27 billion as a U.S. GAAP margin on our best estimate belief of where the liabilities should be, the 2 boxes to the right are the mechanisms by which under IFRS we will actually release these earnings. The contractual service margin, the CSM, determined by our actuarial teams on a bottom-up basis, but will be a large chunk, which will show how much we've got as a buffer to bring through our earnings year-by-year-by-year of the in-force. As we write new business, we'll increase that CSM with a buffer on the new business. And similarly, the risk adjustment will also be coming through our P&L over time with a different pattern on a different basis. But the 2 of these together will show that a number, not necessarily equivalent to the $27 billion, but directionally similar to it, will be coming through our earnings over the coming years. One thing to be concerned about for the industry and for us is this concept of onerous contracts. Moses was explaining and Christian also, that under U.S. GAAP when you write the new business, you fix the assumptions, and those assumptions don't change over the life of the contract. And overall, you've got this position for the entire Life & Health business. As we move to IFRS, there will be sub-portfolios, which will be relevant. And those sub-portfolios will have a contract service margin. It's not one big number for all of Life & Health. One of the things to be determined between now and when we actually apply this is the level of granularity in which we break down these portfolios and put in place those contract service margins. They'll be relatively large blocks of business, but they'll be specific. So if a specific portfolio, cohort of business finds itself under pressure because assumptions are changing because the actual behavior on lapses is very different than what we expected, because of the morbidity experience is very different than what we have expected, it will utilize the CSM of that portfolio of policies. And we can't move extra CSM from other policies to that, we'll have to work through it. And the risk is that this onerous contracts may be bidding at some time in the future. Now the right answer to do that is what Moses explained in his Life & Health business, is to take advantage of the current situation, make sure that we're pricing our business today not just adequately but with enough extra margin in place to be able to absorb what might be some changes in assumptions down the road. And that's the objective of continuing to maintain this increased pricing power that we've seen in the last 2 years, partly as a result of the pandemic as we go forward into this new regime of IFRS 17. I mentioned, as I introduced this, that we didn't expect equity to be materially or dramatically different from our starting point. And when you think about this, we have, in fact, the U.S. GAAP margin, which is going to give us a stronger starting point in against those the CSM and the risk adjustment, which will bring us back down. Restating of assets and resetting the liabilities, we don't believe is going to have a dramatic impact. We've got a global portfolio with a lot of diversification. There may be some pluses and minuses, but overall, we expect those 2 arrows are, in fact, sideways movements. And on the assets, in particular, the fact that under U.S. GAAP, we've got a mark-to-market either through the balance sheet today with the fixed income securities or through the P&L with the current treatment of equities. The fair value positioning should be consistent with where we are under U.S. GAAP. And on the liabilities, as I said, we already believe that we're able to manage through what might be some pluses and minuses without having any particular direction of that arrow. The second most important slide in this section. The earnings pattern that you see under IFRS will be in-between EVM and U.S. GAAP. We've left this as illustrative because, as I said, we're still in the modeling stage, but we're pretty confident that this is what's going to occur. You will see greater earnings coming through over the life of the portfolio. It will not be as strong as EVM because we don't take 100% of the earnings. We put the CSM against the business when we start, but it will come through. Just to confuse you a little bit in this time, we've put the EVM on the left side of the chart, we've put the U.S. GAAP on the right side. IFRS remains in the middle where it should be. And what you see here is that the components are different, but we're absolutely convinced that there is going to be an important increase in what we will show year-on-year for the profitability of our Life & Health book. And those components come through here on the left side where what we've done is try to give you a baseline of, okay, these are the U.S. GAAP earnings in dark blue. There's a new business contribution in light blue. In EVM, that new business contribution is huge because we give you the entire profit of the business we write on day 1. And U.S. GAAP is very small. There might be some marginal profits coming through as we write the business, but most of it is not going to be recognized. It will be recognized with the earned premiums, which for almost all of our life policies will go over 30 years, and we'll be increasing premiums earned over that period. Under IFRS, there is going to be Three important components. In addition to the already in-force contribution that you'd see under U.S. GAAP, this switch to best estimate. The starting point of our balance sheet for IFRS will have a 0 out the onerous contracts, which are already in place. So you've heard now for at least 2x this drag of the pre-2004 business in the United States it gets better, but it doesn't go away completely under U.S. GAAP. It will go away completely under IFRS. As we've identified the future losses of this and any other line of business, which we think is going to be a drag on our earnings. So the parts of the portfolio, which are drags go to zero. It doesn't exclude the idea that sometime in the future, we may have a different class of business, which becomes a drag. And so the job of Moses, his teams to be sure that we avoid that as we write our new business. The second piece is there's going to be a faster earnings recognition. This is the famous curve that I just showed you on the last page. So we avoid a negative drag. We get the faster earnings recognition of the in-force business. And then the third and by definition, I think probably the smallest of the 3 is the net increase of the new business contribution in any 1 year. So we already see some of that in the light blue on top of the U.S. GAAP side, there will be a slightly larger position under IFRS, but that will be on top of what likely to be the larger 2 pieces, which is no earnings drag from sub portfolios and importantly, a faster recognition of the in-force at $27 billion or a portion of the $27 billion. And just to be clear, of these 2 pieces, the CSM is -- these boxes were drawn directionally correct to give you a sense of what the CSM might look like compared to the risk adjustment, but there is not precision here. And you should not get your rulers out to try to estimate the billions in 1 box or the other. On the right side, then we go back to, okay, well, what does that mean for what our reported earnings are? We've given you a clear guidance on 2022, the 2023, we expect to bounce back as the pandemic impact is reduced. This is the path the walk that Christian talked about to the 14%. And again, we're leaving you a little frustrated. I understand by showing you another arrow to the right on IFRS without putting a number on it. As I said, we're 2 years away from coming out with this. You should expect before we get there, we'll be able to give you more details and more quantification of what this might actually look like. Some other comments on IFRS transition impacts. I mentioned the P&C business. As I said, I don't think we're going to have material changes. One of the curious little frustrations on P&C is the new definition under IFRS of what a combined ratio is, work in progress. It would be useful, frankly, to have some of the accounting firms come to a conclusion of their views, but we'll land that 1 along the way. On investments, as I mentioned, because we're on U.S. GAAP, we've already got what's effectively a fair value measurement along the way. The last point here, the comprehensive income option simply means that for the fixed income portfolio, interest rate moves will be reflected, we expect through our balance sheet, not through the P&L. Volatility, I mentioned onerous contracts already an important part for the whole industry. I think we believe that we'll have a perfectly reasonable starting point, and it's then up to us to be sure that any business, which looks like it's not heading in the right direction, gets repriced aggressively and quickly to protect ourselves. And we do have the CSM as a buffer to absorb some of the changes that might be there for model adjustments or assumption changes. I think that's most of what I have for IFRS. My guess is I have some questions. 2 pages on ACP. As I mentioned, this is a dynamic part of our business. Someone asked the question of, are we concerned about where the alternative capital market is? I don't think we're concerned in part because we're a participant. We have seen a slowdown of growth. We are convinced that the alternative capital is here to stay. The benefits on diversification of asset returns is just too great to ignore. What I will say is some of the market participants, especially those that were in without necessarily a team having done a lot of research. Our priority have been unpleasantly surprised at the ways you can lose money in insurance. And so you can lose it by having 3 major hurricanes in 2017. You can lose it by having typhoons in 2018 and 2019, you can lose by having a pandemic in 2020. And we'll see how people think about the losses that might emerge out of the Ukraine in 2022. But overall, I think the more sophisticated investors here continue to believe that this is a good place to find uncorrelated returns to financial markets more broadly. And so we expect this to continue. That's why we've been able to grow the sidecar and fund platform by almost -- more than 250% over the last 3 years. Although the shortfall relief for our North America windstorm is more material. We continue to be successful in writing the nat cat portfolio. Part of what we do here is the exposure management of those peak risks. And today, it's focused on the U.S. hurricane but we are able to share risk on other parts of the portfolio as well. And interestingly, we've started in 2021 to be able to share some of the risks in the Life & Health portfolio that might become peak risk for us over time. Underwriting capital relief, again, another dimension which strong positioning. And then on the right side, the alternative capital market leadership, just 2 observations there. In a normal course of business, something we've been doing for a dozen-plus years we actually act almost as a broker-dealer. As an investor and whether -- for the most part, liquid tradable bonds, there are some places where we take positions that are less liquid. And that has increased to about USD 1 billion. The team that has done this has systematically been making money on this in part because we've got very good information. We're careful that we put the Chinese walls in place. We're careful that we don't inappropriately share insights onto the market. But overall, we find ourselves in a position where we can, in fact, buy low and sell high. And that's what we've been doing, and that's what we have grown this not quite doubling, but a larger position here. And this is a niche little niche related to our expertise around nat cat. And the second niche is what we do out of the New York and London, in particular, on structuring. So we're able, in fact, together with some of the largest brokers and some investment banks to be a leader in the structuring of cat bonds, in particular, for primary companies and for other organizations. And I mentioned, I think the largest placement done in the last 3 years, it was done by Swiss Re the California Earthquake Authority in 2020, I think, of more than $700 million. Christian mentioned the discussion about fees. That's one of the places where we get fees, unambiguous contribution into our P&L. They're booked in different ways. It all flows into the P&C Re [ team ] because that's where the source of the underlying risks tend to be, but we are able, in fact, to build this up over $80 million in 2021, and we think this can continue to grow as we continue to expand some of the capabilities around this team. And I think with 2 minutes to go, I'll wrap up my session and join the stage for answering questions.

Thank you, John. Andreas and Christian, if I could ask you to join us up on stage. For the second Q&A session. Again, we'll start in the room. John, we did have the question we didn't answer it in the morning from Darius around liability reserves, if you would like to take that 1 to start off.

Yes. So the -- a couple of thoughts. One, I mentioned in the EVM slides that one of the reasons why prior year business was negative over the last 5 years is because of the strengthening that we've done in 2018, '19 and 2020 between the course of -- whole course of book -- sorry, whole course of book and the reinsurance book. In addition, when you look at the what we disclosed in March, you'll see that under the category Casualty in 2021, we increased for our reinsurance business, $330 million of casualty reserves and for our core, so another $125 million of casualty reserves. So this is consistent with our view that social inflation is not stopping. That broader inflations are more serious today than we might have thought 18 months ago. We funded that reserving by excess reserves, redundancies and other lines of business. And so for the year in 2021, the prior year development was very positive actually for core and positive also for P&C Re. But we took the opportunity instead of bringing all of those redundancies through our P&L to reinforce the reserves on casually broadly. And specific to liability, the numbers were even a little larger than the $330 million and $125 million that I mentioned. So net-net, I think we're responsive to the risks. As Thierry mentioned, on the costing side, we're massively focused on being sure we cost this appropriately with the right levels of inflationary expectations. And on the reserving, we've been able to reinforce those lines, which are particularly exposed to inflationary pressures.

Great. If we could take some questions from the room.

It's James Shuck from Citi. John, first question really around IFRS 17. So obviously, there's going to be new disclosures. I'm just kind of keen to get your thoughts on what the interesting things are that will be disclosed that you think we should be looking at? So for example, whether that's with the percentile reserving position? And if you have a comment on what that is at the moment. Also with regards to the onerous contracts. So you've highlighted Life & Health Re in the pre-2004 business, but what are the pockets of areas are currently loss-making that we might get some insight into. And then the second question was really just coming back to the S&P rating outlook. So sort of negative outlook at the moment. It's been that way for some time. I appreciate your existing capital position is strong. We've got the Russia-Ukraine situation currently and nat cats remain elevated. So what is the risk of a downgrade from them?

So both to me. On the IFRS, it's not obvious to me that we've got other specific positions, which are necessarily problematic for us as we make this transition. Again, I referenced the DNA of the group. The DNA of the group is this economic outlook. We've been pricing our business. We've been actually accepting business. We've been judging the value of transactions we do with primary companies based on an economic view first and then subsequently check out, okay, what does this do for our U.S. GAAP earnings? And in that context, I think we've systematically avoided building any uneconomic positions inside the group. And I think this pre-2004 book is unique and that the massive financial implications of a judgment on lapse, which is what's here. It was not appreciated at the time that those judgments of retention of the policies were put in place. But partly because we learned from that, partly because we learned from some disability issues that we had in Australia in subsequent years. When you look across where things could go wrong, we've largely fixed them, and I think we've gotten ourselves in pretty good shape. And in addition, as I mentioned, as we go into the opening balance sheet, the teams have clearly understood that this is a time to get some things right and forever hold your piece. And they're systematically doing that, as they've done most of that work, we remain confident with what we know today that the balance sheet will look rock solid and that our equity position is unlikely to be very different than where it is under U.S. GAAP. So I think that's the answer. So what you look for going forward, I think one of the things that's going to be transparent to the world, not for Swiss Re, but for everybody, is changes and the CSM will be fairly transparent in showing where there have been problems. And so I expect every time we report the results with that CSM, we're going to get a lot of questions from you, James and your colleagues about what's going on in that business. And that's where I'll be sure I've got the answers. With respect to S&P Capital, you're right, we have been sitting on this negative outlook for a period of time. I think when it was put in place the concern was about the underlying earnings of the group. I think we've been able to demonstrate that especially in our P&C business, which is where some of the concerns were that both in CorSo with the turnaround and in P&C Re were in just a very different position. Having said that, the losses associated with the pandemic have been losses that we've had to book in U.S. GAAP, and they see is real, and it's been I think, delaying any ability for S&P to be able to push us forward. You mentioned the war in Ukraine. I think, again, as Christian said, a no indication that we've got any outside losses here, a belief that, at least with what we know today, the 10% share of the reinsurance market and that would include losses that might show up booked and core. So comprehensively, we're kind of at that level. What we might expect. I don't think that's enough to turn S&P in 1 direction or another here. I can't say that they'll be excited to remove the negative outlook until some of this -- the uncertainty clears.

Maybe Andrew and then.

It's Andrew Ritchie from Autonomous. A question for each one of you, you'll be glad to know. Andreas, to start with you, some easy ones. How much of your reinsurance is third parties? You showed us the towers. Also, are you now sort of -- have you now got the capability you're directly competing on program business, international program with the -- I mean I think there's maybe 4 other big companies with that capability. Are you at that point now. On iptiQ -- sorry, Christian, I don't understand fully the definition of gross income. I'm not sure what it's excluding. And in relation to that, I remember there was a presentation in London a few years ago now, where there was a suggestion that there was still some uncertainty about the underwriting quality of some of the business iptiQ was writing. I think it was on the Life side at that point, and there was a bit of adverse selection going on. So what's the kind of thoughts as to the technical profitability. On IFRS 17, for John, I think you were saying -- I don't know what the duration of the average duration of your CSM will be. So I'm just trying to work out the amortization rate versus the value add from new CSM every year. Are you saying that as things stand this CSM will definitely be growing as in you'll be adding more CSM than what the expected amortization is, if you understand what would I mean. On non-Life, I think you're saying then all of your business is [ PAA ]. Is that what you're saying? And finally, some of your peers have pointed to quite a lot of their life business has not actually being captured by IFRS 17. I'm thinking here, particularly Financial Solutions-type business where there's not enough risk transfer to qualify for IFRS 17. Is that the case for some of yours as well?

Okay. I'll start with the CorSo part on the reinsurance side. We came from using 100% reinsurance through our business unit sister reinsurance. And as I said, reinsurance was not really the big topic because we had high net retentions. Then you can't switch it immediately. So we started to buy external reinsurance. But the first call was obviously the reinsurance had its price at arm length. So it's all fine, but there are certain lines of businesses that we go external with and there are certain regions where we have external reinsurance. We have JVs, for instance, so where we go definitely externally also. So I think we are -- you could see us as a new player on the market. We have an attractive portfolio now. So it's becoming interesting for reinsurance players or reinsurance brokers also. So, so far, so good. And I think you will probably see a bit more external reinsurance rather than only having Re. On the international program side, whether or not we can compete with the top 4, I mean, this is a very clear, yes, there are examples that I was referring to were actually wins that we had from the top 4. You have to look at it as a consortium market. So you never lead 100%. So there's always a lead and then followers. So we have won significant amount of leads from incumbents. We do have a portfolio of 2,000. This is a theoretical opportunity. 2,000 follower accounts, representing $1.5 billion premium, gross written premium which theoretically we could convert. But we're very targeted, very specific, and we're very happy to be a new player in that part of the top 5 or so industry if you add us to the top 4.

So for iptiQ, this is actually not our invention. This we were looking in this [ intratech ] world of what they are using. And if there's anything we can compare to. So this is something we unearth in that segment. And the intent of it is, I guess, mostly to take out the overhead costs and have a measure for how much you earn grounds up on the underwriting side. So the definition is in this slide, but I don't want to say something wrong now, I think, in the slide. And if not, then I'm sure Thomas can provide it to you. But underwriting quality, I think the benefit of having -- of being so close is we monitor that on a very, very granular level. So we know exactly which country, which products on a frequent basis during the year, how it's doing. And if we see something like lapsation in the U.S. going the wrong way, we can correct very quickly, and we have done so. So the underwriting is actually good. We're happy with the underwriting, how it looks like. Last year, we had some -- and also this year, we're going to have some COVID cases, not a lot because it's still small. There's some COVID cases, there were some losses from the European flood very small in one of the P&C portfolios. But overall, I think we have significantly more data and are more closer to the underwriting than we are in reinsurance. So clearly, you would think potentially an area of concern because as we grow quickly, and it's a new business, there's going to be some underwriting issues. We're very conscious of that and try to avoid that through this very detailed monitoring.

And Andrew, on IFRS. The second part of your question, the nature of our life and health business is systematically focused on risk transfer, the morbidity and mortality and a little bit of longevity. But the kind of financial investment products that might escape IFRS 17 are not important at all in our overall portfolio. So I don't think this will be significant all in the actual reporting we go forward with. On the P&C side, we've been forced to think through the challenge of running 2 different methodologies for CorSo and reinsurance versus the theory of oneness where we simplify our life a little bit. The risk is how we find our ability to compare with peers in 1 place or the other. But I think our orientation is to go with a unified position for the entire group and we'll disclose exactly where we are with that as well as some other important choices we'll make in probably the next round of disclosure around the IFRS work, if that's okay.

On CSM.

Yes, sorry. On CSM. Look, the we've been systematically building the Life & Health portfolio. We don't see any reason why that changes on a going-forward basis. And so we would expect the new business we bring on to be a net contributor to the CSM. I can't guarantee you that will be the case in every year. We might find some situations where the -- there's something going on in the market which will have us step back a little bit. But directionally, the job of the Life & Health team is going to be to reload with another year's business.

Simon?

Simon from Vontobel, John. I have 2 questions on IFRS 17, obviously. And apologies if my understanding hasn't fully developed yet. If I'm not mistaken there, we modeled for the transition. The first being a full transition where you convert the full book to IFRS 17, the others being a partially convert the book because of lack of data. I guess, given that you've used EVM for such a long time that you convert -- that you can convert the full book to IFRS 17? And the second question is the average CFO, I thought, would have the choice of setting book value and then see what the outcome for the ROE is or set the ROE and then kind of play with book value. And I get the impression that the book value will be similar to economic networks, so it will be higher than U.S. GAAP. And also the net profit will be higher. Can you confirm that directionally? And then on iptiQ, would you consider reporting this as a stand-alone division in the future? I think that would be helpful to crystallize the value going forward.

So Simon, on the IFRS questions, the -- in the first case, as a reinsurer, we actually have less access to some of the granular data than a primary company might have. And so we're likely to make a choice, which is up to a point of time, which is at least right now considered to be 2019. We will aggregate everything on fair value basis. And then from that going forward, we'll be able to have enough information to be able to apply a more granular standard going forward. So there'll be a little bit of a hybrid. I don't know that, that will be unusual for reinsurers. But the -- I can tell you from my old days with AXA, the information that you would have there for old years is very different than what we have here. With respect to your question on book value versus report and shareholders' equity, I'd rather defer that just because the relative magnitude of the 2 pieces is work in progress. And I wouldn't want to mislead the market with where we'll land. But again, we've got some real time to be able to provide this kind of information.

And iptiQ? It's you or me.

Innovatively, we're going to disclose at some stage more. But if I'm not mistaken, already now in the full year report, you can see some segmentation. It's somewhere in the back, but -- it's a requirement because it's already big enough to have to be separate. But I think absolutely, you're right that at some stage also in the slides and everything we disclosed, we're going to bring it in.

Iain Pearce from Credit Suisse. On IFRS 17, just to confirm, so you will run into IFRS 17 using the assumptions that you have locked in under U.S. GAAP for the Life & Health business and then IFRS 17 isn't a chance to reset Life & Health assumptions. In which case, I guess, you will be booking a loss for an onerous contract on the U.S. pre-2004 business. And if that's true, do you have any idea roughly what that might be [indiscernible] in the current scenario. On iptiQ, is there any cost subsidization from the group at the moment that's included in iptiQ numbers? Or are the numbers that are being disclosed what iptiQ would disclose if it was a stand-alone entity, things like head office cost people, these sorts of things. And then just a point of clarification on the dividend with the transition to U.S. dollar dividend. Will the dollar amount or the Swiss franc amount be the level of which is underpinned for the progressive dividend policy?

Sorry, underpinned for?

For the minimum level of the dividend, the progressive dividend.

So on IFRS, I apologize if I wasn't clear. In the transition to -- from U.S. GAAP what are now locked assumptions are, in fact, irrelevant for the way we go forward. So we'll effectively be resetting all the positions along the way. And that's why we zeroed out the onerous contracts on day 1. The good news is, as I mentioned with the diversified portfolio and the fact that we've got in other places, some very positive positions that will unlock. Net-net, we don't expect much of an impact across our entire Life & Health book. And so the -- giving you any of the growth positions for pre-2004 is not particularly relevant. The overall net position should be fine. And then we've got the CSM, which will come through and absorb subsequent adjustments that we might find we need. With the Swiss franc dividend transition to U.S. GAAP dividend. I think the Board of Directors will be paying attention to how we fulfill what our capital goal is to at least maintain the dividend under multiple lenses. And I -- assuming we've got the capacity, I would assume that they'd be looking to manage an okay outcome whether you care about Swiss francs and not play with what might be some positive moves for exchange rates.

I'll take 1 on. So generally, we have a relatively sophisticated cost allocation process. Like I think most groups, there's some costs that are super hard to allocate and they're not allocated at the group level. I don't know what the number is by now, but it's in the accounts, probably $300 million or so. And for all the rest, every department in Swiss Re needs to say for whom they work. So communication, IT, HR, everything. And so the iptiQ numbers you see in the annual report in the appendix is the -- what we think is a true and fair allocation of costs from the whole group. So there's clearly an overlay. And there's no discount or preferential treatment of iptiQ.

Kamran Hossain from JPMorgan. Two questions. The first one, just thinking about the dividend, hopefully, we get through this year, next year and the year after with kind of normal levels or kind of benign levels of loss. And I guess there will be kind of decisions to make around the dividend. You've talked about growing it in line with kind of underlying or kind of long-term levels of kind of earnings growth. But at the same time, we set out a kind of 14% ROE up from something like maybe like 12 underlying this year when you ex out COVID. So what's the right kind of ballpark for us to think about the long-term earnings growth of Swiss Re and then maybe how that plays into the dividend? And the second question, I don't know whether this will be a shorter answer than the first one. But iptiQ last time, you said you thought it was worth something like $2 billion. Do you have a kind of number that we should put into or some of the parts at the moment?

So I don't think we're at a point where we're prepared to give you clear guidance on how much the dividend growth would be. I do think it's our clear aspiration to get back on track and growing that. And I think it's going to depend on the overall levels of capitalization, SST being, by far, the most important one, but we also care, as James mentioned, about our S&P positioning and some others. So we'll have to take this into effect. On the assumption that we're on a trajectory that goes from 10% to 14% ROE on a U.S. GAAP basis, we should have the wherewithal to be able to do that growth as well as deploy new capital and new business. And I'd rather not be specific into sort of what percentage you should expect either as a derivative of those ROEs or otherwise. But directionally, we understand the interest, and we think it's consistent with the capital generation that you see from the group. On iptiQ, I don't think we said $2 billion. I think what we said is if you take the valuations that people are putting on other in [ InsTech ] groups, you get to $2 billion, and I think there are 2 important pieces there. One is, we continued our growth very strong in 2021 after a strong 2020. And we think that's very important. When Christian talked about the new partnerships, there's a delayed impact of the premiums that come based on the partners that we sign up, but we expect that to continue. And then more importantly, different than many of the [ InsTech ] groups that have come to market all right? As Christian observed, the ability for us to acquire new business at less than outrageous acquisition cost means that our cost don't grow as fast as those premiums do. And that gives us hope in 2025 that we, in fact, will be on a breakeven path. And so there, I think and you can look at what's very much in the public domain now that these guys have all gone public, it's a different trajectory that says our business will cover itself and that year by year, we're getting closer to that, not further away from it.

Well, I'd like to add something because obviously, when we did that, it was also to provoke a little bit and certainly to avoid that the analyst community is this $250 million of cost times 10 PE in terms of value. So -- and we have been partially successful. So some of you have put your own price in. The only thing I would correct to what John said is that we looked at the valuations of others, but they were way higher. So as you remember, we took a huge discount because we thought these valuations were not sustainable. But of course, this valuation has dropped also as we had expected to a certain extent. So I think in terms of -- I appreciate you don't have cash flow, so it's very hard to do discounted cash flow. But in terms of comparison, it's relatively easy now because you have some of these [indiscernible] traded. So I think everybody can make their own guess of the value.

So switching to the phone. Will from UBS.

Yes, it's just linking up some of the comments on capital management. I'm wondering how important is debt leverage is a target metric and any concept of the targeted range? Because, of course, we've seen higher fixed income yields being very beneficial for solvency, but that would be negative to leverage? And how would this line up, I guess, with capital management strategy of maximizing financial flexibility that you talk about and linking perhaps the capital distributions going forward?

So the -- well, we've shown in the past a deleverage of the group over the last 5 years into a position which is much more in line with I think all competitors with maybe 1 exception. I think the observation I would make is we do have -- and I've spoken about this a lot in prior periods. The $2.7 billion in contingent capital, which we've already put in place and priced out, accessing that is simple and an easy way to be able to support a combination of growth and capital deployment should we choose to do so. I think big new debt issues in the current market environment, may be less likely. We don't have any plans. We have a maturing issue in September of this year. So we'll see what we do with that. But there's -- the way markets have moved I don't exclude the possibility that we find ourselves with the ability sometime during the next 9 months to be able to tap markets if it looks intelligent to do so. But we're -- we've got much more flexibility today than we had 5 years ago, precisely because of the deleveraging that we -- that has occurred with the group.

We'll take.

So John, presumably, therefore, I mean, I don't know what it would be as of today. Maybe I think our low 30s at year-end, probably possibly mid-30s as of now. That's fine. And as you said, you'd consider in that the sort of level we should think about Swiss Re going forwards?

I think we're in a range which we're comfortable. I don't think we see a need to lever up from where we are. But should we see a reason to were not excluded from that possibility. One of the interesting things in the potentially adjusted S&P model was an apparent indication that they would accept more subordinated debt as part of the capital structure relevant for S&P to be seen where the final positions are after they get the comments here this month, and we'll see how it plays. But right now, there's no intention, I don't believe, to increase that leverage absent some very good reason.

Thanks, Will. We'll take the final question from Vinit before we move to the wrap-up by Christian.

I hope this line is clearer. So 2 quick ones on IFRS 17 and 1 on CorSo please. So on IFRS 17, the first 1 is John, you said that there would be more conservative baked in just to manage this whole CSM onerous contracts. I presume that refers to new business written by Life & Health. And do you think that's a material change in how Swiss Re goes about its business? Or is it just that much but a slight shift? And second question on IFRS 17 is when I -- and this is very, very top down, really, when I see the comment from the primary sector, it usually is going to be much -- it's going to be really bad or not so bad in terms of where today's IFRS. And I know you're coming from U.S. GAAP, but are you sensing a bridge to cross here with your clients? So in other words, you and maybe some of the other reinsurers more keen on the IFRS 17 topic, whereas the primaries might be trying to delay it a bit? And are you seeing any discussion of service clients? And on CorSo, the question is on international programs, which is on Slide 70. And I remember that quite a few years ago, one of the larger players in Switzerland, they had this presentation about international programs and then we found that it led to some problems. And so if -- I mean, the kind of growth you're looking at I just wanted to know, are you comfortable with some risks that might be there with this international program business?

Okay. On the international program business, we've grown cautiously over the past. This was a very careful growth not only because of risk appetite, so we were very selective. Secondly, we were testing our systems, testing our capabilities and processes. So when we tick that box, then obviously, we looked at what are the target accounts. And if you choose an international program, you typically choose a line of business also. So when you go into the property line of business that needs to be in line with the risk appetite in property and with the rate expectations that we have in property. So we have a very granular view on an occupancy level. And there, we make our choices, we see whether the long-term pricing adequacy is right, and we're not a cheap market. And we did the back testing actually on our managed accounts and those managed accounts typically are then also international program accounts, and they have outperformed even in the soft market side. The rest of the portfolio more on the wholesale part. I think that's good news. But nevertheless, we've got to be very specific, very focused, but we're quite happy with this, yes.

And Vinit, on the 2 IFRS questions. In the first case, I'm not sure that we're going to be materially more conservative going forward than we have been. What I think I mentioned was in the price improvements we saw on our Life and Health book in 2021, especially sort of related to the risk awareness around the pandemic. I -- as a CFO who will certainly encourage our teams to continue to maintain that better pricing for future risks. And so the pressure I'll be putting on the organization is continuing to focus on big margins on the business because it's a risky world out there, and that's true both for Life & Health and for the P&C activities that we're writing. So that's the way -- the best way I know to ensure that when we reload, we reload with strong CSMs to be able to manage anything that comes up different than the current expectations. Again, the balance sheet we're starting with and the 1 slide that I mentioned in my most important slide, where we had the 3 kicks to the underlying position is reducing the drag from onerous contracts today, not called onerous under U.S. GAAP, but effectively reducing our profitability is the starting point will have. So -- in that sense, maybe there is a little bit of conservatism built in, where we take future losses and bring them back into the opening balance sheet. Again, we think we can do that without a material adjustment to that opening shareholders' equity. The other comment, I don't have any specific observations about clients. What I would say is the impact of IFRS 17 is going to be materially different for participants based on their in-force book of business. And the -- there's not going to be any systematic impact of this is good or this is bad. It will depend on the business they've written over the last 20 years and they are on their balance sheet as they make this transition. And so it's going to be a lot of work, I think, for people to understand and 1 assumes the companies themselves have understood this, but to communicate why certain items on their balance sheet and/or their income will be different under IFRS 17 than in the current IFRS. And that, unfortunately, is going to put a lot of work on the analyst community to be able to follow through who's going up and who's going down as a result.

Thank you for all the questions. Andreas, John, Christian, thank you very much. Christian, I hand over to you for the wrap-up of the day.

Yes. Thank you very much, Thomas, and I really want to thank everyone for joining us today. These are always long days, but hopefully, they were valuable for you and a special thanks to all of those who made the way up to here, it's great to see some people in a physical way. There are some key messages, which hopefully we went through today. I think what I'd like you to keep with you is -- in terms of our strategy, we're not just a risk taker. We have really expanded the mandate. And I think this is going to be things we're going to talk more about in the future around risk partnerships and risk insights. I hope you get a better sense of how we intend to go to the 14% ROE by 2024. I hope we could clarify some questions around our capital management. And then hopefully, you got some insights into the different business and actually, if I reflect back over many, many years, it's probably a point where I think it's the first time everybody is positive in terms of the business. And of course, I say that in a time where you think it's a very -- in a negative time with what's going on, but clearly, the underlying profitability, in my view, hasn't been as good as that since 2013 or something like that. And then finally, hopefully, you got some sense around IFRS 17, even though we're a year later than others. I'm sure this year is going to be the year of IFRS 17 and workshops and things like that. So I'm afraid it's just the beginning of what you're going to hear around IFRS. So thank you very much for joining us. And hopefully, we see you all at the next Investor Day. Thank you.