Swiss Re AG (SREN) Earnings Call Transcript & Summary

Good morning or good afternoon. Welcome to Swiss Re's First Quarter 2025 Key Financial Data Conference Call. Please note that today's conference call is being recorded. At this time, I would like to turn the conference over to Andreas Berger, Group CEO. Please go ahead.

Thank you very much, and good morning or good afternoon to all of you. I appreciate you taking the time to join us today. Before our Group CFO -- our new Group CFO, actually, for his first time, Anders Malmstrom, walks you through the details of our Q1 results, I'd like to start with some brief introductory remarks. We have achieved a good start to the year, delivering a first quarter net income of USD 1.3 billion and a return on equity of 22%. All business units contributed to this result, also helped by strong investment returns and this gives us a very good base as we approach the rest of the year. Our financial results were achieved against the backdrop of a quarter that featured significant large losses on the P&C side. Across P&C Re and Corporate Solutions, large losses amounted to USD 900 million with the LA wildfires contributing around 2/3 of that total number, consistent with the preliminary estimate of below USD 700 million we provided to you with our full year results in February of this year. Large man-made claims totaled USD 300 million in the quarter, which is above average. Despite these impacts, P&C Re and Corporate Solutions produced resilient bottom line results, which also include positive nominal reserving result of just below USD 200 million. This is a clear sign of increased resilience and that's exactly what we strive for. I'm happy with the outcome, most of the April renewals in P&C Re. The results are consistent with those of the general renewals. Year-to-date, we have achieved 6% volume growth, while the net price change of a modest negative 1.5% is supportive of our 2025 targets and reflects the overall discipline that we continue to maintain. When you combine volume and price development, P&C Re's new business CSM of USD 1.4 billion in the quarter -- in the first quarter is unchanged from the same period a year ago. That's a very solid outcome and we will look to maintain this as we approach the important midyear renewals. To stress again, we have no top line targets. The focus is entirely on maintaining healthy risk-adjusted margins and a high-quality portfolio. Life & Health Re produced a solid start to the year. The USD 439 million net income is just above the pro rata target requirement of USD 400 million and reflect slightly positive overall claims experience, which is a good sign. We're also making progress on costs. Our admin costs for the quarter are in line with the cost ambitions outlined during our investor event in December last year. Accordingly, we're on track to reduce our cost run rate by at least USD 100 million this year, contributing to the overall target of USD 300 million by 2027. We are confident, but also vigilant as we look ahead. Priority #1 is to deliver on our targets, and we are in a good place to do that, but we see lots of risks out there and overall volatility has been high in the past weeks. The macroeconomic environment remains uncertain. And while we are not directly impacted by the ongoing tariff situation, we are watching very closely for related effects, for example, by increased inflation risks. This is where prudent underwriting is absolute key. Our overall portfolio strategy are focused on setting prudent initial loss picks and the additional layer of the uncertainty load we apply on new business all contribute to the increased resilience of our earnings power. And with that, I'm happy to hand over to you, Anders, our Group CFO. Thank you.

Thank you, Andreas, and again, good afternoon or good morning to everybody on the call. I will make a few remarks on the results we released this morning before we go to the Q&A session. Andreas has taken you through the highlights of our overall positive first quarter. Let me add a few further details. On revenues, the group's insurance revenue amounted to USD 10.4 billion in the first quarter, down from USD 11.7 billion last year. There are a few exceptional moving parts here. Last year's Q1 revenues included nonrecurring IFRS transition effects, primarily related to profit commissions, which were recorded in both revenues and expenses with no impact on the insurance service results. In the subsequent quarters, we refined our methodology by netting these amounts, reducing both revenues and expenses equally since they involve the same counterparties. Another component is in Life & Health Re, one that we flagged last year. This related to the termination of an external retrocession transaction with no bottom line impact. On top, we have seen negative FX impact this quarter across our businesses. So on a like-for-like basis, revenues are broadly flat at the group level, up around 1% to 2% in Life & Health Re, up around 4% to 5% in Corporate Solutions, and a low single-digit decline in P&C Re. For the rest of the year, we would expect stable revenues compared to 2024. Earnings are what matters, and we continue to see good resilience here. Despite some pressure on rates across our P&C businesses, the new business CSM production of the group remained very healthy at USD 1.7 billion in Q1, down only marginally from last year's USD 1.8 billion figure. Let me move on to the insurance service results of our businesses. In P&C Re, you will notice a decline in the Q1 CSM release versus last year's period. The USD 710 million release this year is down from last year's USD 953 million. This decrease was driven by the earn-through of prudent initial loss picks, including impact of new business uncertainty allowance and slightly lower margins. Experience variants and other, as we call it, and which includes all variances relative to initial reserving assumptions amounted to a negative USD 140 million in the quarter. This reflects total large nat cat losses of USD 570 million, where of USD 537 million related to the Los Angeles wildfires, which is well above the Q1 seasonal budget of USD 360 million. P&C Re also booked large man-made claims of USD 140 million, and while we do not publish an explicit budget for large man-made claims, this amount is higher than what we would normally expect to see in an average quarter. The negative variance on large claims was partially offset by a positive prior year result. Nominal reserve releases in P&C Re amounted to slightly below USD 150 million in the quarter. This reflects the overall strength of our reserving position. And to the extent the uncertainty load is not required, this is where you see the benefits. In terms of the combined ratio, P&C Re's Q1 result of 86% is just above the less than 85% target we have for the year, but there is ample time to catch up. Moving on to Corporate Solutions. The Q1 CSM release of USD 196 million is in line with the average of the last quarters, indicating stable absolute margins. The decline compared to last year is driven by some IFRS transition impact in Q1 2024. Experience variance and other was positive at USD 36 million. This reflects a positive prior year reserving result, partially offset by higher-than-expected man-made claims, which amounted to a significant USD 150 million in the quarter. And as usual, an allowance for potential claims seasonality due to late reporting. Large nat cat claims of USD 60 million were driven by the LA wildfire loss of USD 50 million. Corporate Solutions 88.4% Q1 combined ratio compares to our target of less than 91% for the full year, so clearly a good start. And finally, Life & Health Re, the Q1 CSM release of USD 432 million is broadly in line with last year's Q1 number and slightly ahead of what we would expect in a normal quarter. Experience variance and other amounted to a negative USD 91 million, which largely reflects targeted assumption updates we undertook on onerous business and some volume updates. Overall claims experience also mortality was slightly positive. Life & Health Re's net income of USD 439 million, as Andreas already mentioned, is just above the pro rata USD 400 million share of our USD 1.6 billion full year target. So also here, a solid start. We benefited from strong investment results with the ROI of 4.4%, well ahead of last year's 4.0%. A large part of the increase is due to the realized gain we achieved on the sale of our Definity stake, which was partially offset by targeted sales of fixed income securities. Recurring income remains healthy, standing at USD 1 billion in Q1. We also benefited from a favorable tax rate in the quarter of 14%, which was well below our normalized 21% to 23% expectation. We benefited from some legal entity restructuring effects partially related to iptiQ, you should obviously not expect this to recur. A few words on capital. We estimate the group's SST ratio at 254% for Q1, broadly unchanged from where we ended the year. Additionally, we also announced this morning that we plan to cancel USD 18.7 million of surplus treasury shares, which are not eligible for dividends, out of USD 317.5 million total shares. As a result, upon completion by the end of Q2, the total number of shares will be 298.8 million, of which about 294.8 million shares outstanding. So eligible for dividends and about 4 million treasury shares held primarily for share-based compensation plan. This exercise is just for good housekeeping as these treasury shares are clearly surplus to current needs. That's where I will leave it for now, and I'm happy to hand over to Thomas to kick off the Q&A.

Thank you, Andreas. Thank you, Anders. [Operator Instructions] With that, operator, could we please have the first question?

The first question comes from the line of Mr. Kamran Hossain from JPMorgan.

A few questions from me. The first one is on the -- I guess, on the reserve release. I think I'm just really interested in kind of thoughts around it. I mean, I guess last year, towards the end of the year, you took quite a big reserve charge. There was a debate at the time whether you were being too cautious in not assuming reserve releases, and we kind of sit here in Q1, and there has been a reasonable sized reserve reduced in the quarter. Just trying to understand whether this is kind of -- this is a reflection of all the hard work that's gone on? So actually, things like this could be more normal going forward? Or whether this -- as you know, there's a little bit of volatility in the quarter with LA being particular issue. And therefore, you thought it was a good time to offset some of that volatility with a reserve release? The second question is on the revenue point. Obviously, been a reasonable kind of area of discussion this morning. Could you just clarify whether the -- you said your stable revenue compared to 2024. Just to clarify that's relative to Q2 to Q4 should be stable versus 2024?

I'll give it to Anders on the reserves and revenue now, I'll chime in if I have to add something.

Okay. So let's start with the reserve release. And I think obviously, Kamran, you remember in Q3 when we took the big reserve adjustment. I think at that time, I think we said that going forward, we assume kind of neutral reserves and development going forward. I think we saw now in Q4 and in Q1 that we actually had a reserve release. I think that's, in my view, very, very good development because I think this shows the resilience of the reserves. I think right now, we would still guide to a neutral development, but I think we will show over time that I think this is that the reserves are resilient and I think, as expected, because of the higher loss pick and the uncertainty load that reserves should come to everything else equal. So yes, I think we're comfortable with the position. And going forward, we should see a similar development. On the revenues. So as we said in the prepared remarks, the Q1 is clearly, in a way, the peak of the decline, which is really all non and bottom line relevant because you have the IFRS transition effect of about USD 0.55 billion. That was due to the commission, the profit commissions that we took a gross view and we changed to a net view. So that was a revision of the methodology. So that should not reoccur going forward. And we have, as I mentioned, the Life & Health side, we had the external retro transaction that we terminated. This is also about USD 0.4 billion reduction. That was a Q1 event. And then we had FX of about USD 0.2 billion. So if you take all of that out, I think that's what I mentioned. You already see that we're pretty much flat, and we would also then expect going forward that compared to Q2 to Q4 compared to last year. we should be very -- in a very similar range. So we shouldn't see this one time. So this is really one time in nature.

The next question comes from Andrew Baker from Goldman Sachs.

The first one on, so the Life & Health Re CSM release was a little bit higher than your guidance. Are you able to give any color on what drove this and really how we should think about the CSM release relative to your guidance going forward? And then secondly, just on Corporate Solutions. Are you able to break out the experience variances by the favorable underlying performance PYD and large loss that you called out in the slides?

So Life & Health Re, Anders, you might take as one and of course, the Corporate Solutions side, I can add if necessary.

Yes. So the Andrew, the CSM release that we saw in Q1 was, as I mentioned, it was slightly ahead of what we would expect in normal quarter. I think we would call that volatility. That's not trend. I think we guided to an average of 8% of CSM release. I think that's what you should expect going forward. So that's more volatility. Maybe, Thomas, yes?

Andrew, could you just repeat the second question for Anders, please?

The experience variances, you called out that it's a sort of -- its blend of favorable underlying performance, PYD and large loss experience. Just trying to get a view of how much the -- really the favorable PYD was.

So the positive nominal for CorSo was, I think, below USD 50 million, slightly below USD 50 million coming from last year's experience, and then we had the significant and large man-made experience of, I think, about USD 150 million for the quarter.

The next question comes from Will Hardcastle from UBS.

I guess the first one is a big picture one, Anders. You've now been inside the group for a number of months, for [indiscernible] as CFO. Are you able to give us any insight as to what's been surprising, maybe both positively and negatively? The second one is just a bit more detail on the Life & Health experience variance, please. I guess we've gone through a bit of an exercise. And just wondering if any of this related to stuff that has been -- actually has been taken on or what's driven the further deterioration? Or is it completely separate?

Yes, sure. Happy to do so. Look, I mean, I think I'm now here for a few months. I think overall, very positive. I think you see it coming also to the results, resilient results. I think the company is well on track. I mean, obviously, knows Swiss Re since a very long time from the outside, now being in the inside, very dedicated people, passionate people. I think all want to do the right thing and I'm actually very happy to be here and to support that. I think we are on the right track. I think you see that coming through with the results. And yes, I think this is it. We are up for a good journey here together. On the Life & Health experience, as we mentioned, overall, I think, positive. I mentioned the mortality, in particular, you can also -- U.S. mortality, which was positive for the quarter. We had some small adjustments in EMEA. They're all assumption-driven. So they're not claims driven, they're assumption-driven and also volume driven. We did some volume updates. So nothing concerning there.

The next question comes from Iain Pearce from BNP Paribas Exane.

A couple just on the P&C new business. So just a clarification on this revenue point in CSM. Do you expect the new business, CSM and P&C Re to grow this year is the first question. And then the second one is just on the property business, not the nat cat, the property business, which has been driving the growth in P&C Re. Could you just talk about what you're seeing in terms of pricing on that line? Just sort of a bit more detail by the sort of individual lines of business, what you're seeing in terms of risk-adjusted pricing.

Maybe -- maybe I should start with the second one and then you can take the first on the P&C and new business CSM. And what do we see in the market? I mean you've seen in our numbers that property was the positive outlier. We had a double-digit growth, plus 24% volume change in contrast then to casualty. And that's exactly in line with our strategy. We're further reducing our market share on the U.S. casualty side. We see rate increases. I mean we're not stopping underwriting casualty. We see significant rate increases in the U.S. also in casualty. Property and nat cat are the ones where we see -- well, tougher competitive environment. But I can say that it's still in a very healthy space. The good thing is that those structures, terms and conditions, attachment points are very stable, and that is very helpful. So we're still in a high margin territory. Property, in particular, found good increases. Territorially, it's not only in the U.S., it's mainly also Europe, where we saw some significant increases. And cat, we have seen increased demand for cat capacity and also property but cat in particular. And we see that as a trend. There were significant losses this year right at the beginning. So that was probably the heaviest loss quarter in the history. There are different voices in the market. Some say there's still a very continued competitive environment. Others say the losses had to be absorbed. So large part of the loss budgets, the nat cat budget were already consumed, which will definitely have an impact on the next renewals upcoming in, one, June and one, July. And this in itself, they've made 20% of the renewal business for our book. So let's see. That's the trend we see, and you can compare notes then with the markets, but property positive, specialty positive, cautious in casualty rate increases for renewed business, but reducing market share. That should be a summary.

Okay. And then quickly over to the new business CSM that we have seen or the earlier question is also kind of going forward. So first of all, I think you've seen that even in light of what Andreas just said, you saw that the new business CSM basically stayed flat year-over-year for the China renewals, I think, which is, I would say, a very positive outcome. You should see going forward, we put a lot of emphasis on both. So you should see that CSM remains strong. I think one point I would like to mention here is also on the uncertainty allowance that goes into the new business CSM. That was obviously a reduction from the past, but over time, you should see that now coming through then to the underlying experience. And I think that's actually a good thing that you will see a more, call it, conservative reserving assumption upfront, which is reflected in the CSM, but then you will see it through the experience -- to the experience actually coming through on the bottom line.

The next question comes from Michael Huttner from Berenberg.

Fantastic. I had two questions, which I'm afraid, I'm conscious, I'm going to contradict you. The first one is, have I missed something? Did you raise your guidance because you did USD 1,275 million for Q1, if I multiply it by 4, I get to USD 5.1 million and if I add in all the various one-offs in tax reserve leases, gains, higher than natural, higher than normal losses and then the extra reserving life, I get to pretty much 0 number. So USD 1,275 million for me is actually a run rate. So I just wondered whether you can explain -- maybe you don't -- you never changed guidance, I don't know how you would see it relative. And then the second question, that's the contradictory. Zurich in their call last week, the week before, said they bought an aggregate? That, for me, is a clear sign of market softening. And then this morning, Unipol said the same, but they were very specific. They said it is basically to protect earnings against midsized events. And then, of course, I think Monday or Tuesday, Conduit said the same. They also bought aggregate cover now. For me, these are clear signs of markets softening. And I'm interested by your comment that you say no, terms and conditions have not changed.

Thank you very much, Michael. I would give the second question to Anders. Let me take the first question. I think nothing has changed for us. We always said we have two objectives. Number one, hit our numbers. Yes, so we will hit our numbers, meaning the target that we put out. Number two, increase the resilience of the group. We're on a very good trajectory. We feel very comfortable with where we are. We took some decisive actions. And now it's on delivering quarter-by-quarter-by-quarter just to get that confidence that this is a resilient business. So don't look at it as a run rate. So we came out in December, in our management dialogue on the December 13. We gave you the outlook. We said that with the reserve strengthening in Q3, we now can show the underlying earnings power of the group. We also said that we stayed vigilant. It's a very tough environment out there. And we manage very diligently quarter-by-quarter. So what we said is still holding. And we're confident that we're meeting our targets.

Yes, let me go to your second question. Maybe when I look at the April renewals, as a starting point. I think you can -- you saw that we basically were able to broadly defend the margins. But what was equally important, which you don't see in the numbers is that we were also able to maintain the structures and the terms and conditions, they were basically -- stayed largely unchanged, which I think is a very good outcome here. And also when it comes to aggregates, I mean, that's a period that we are extremely cautious. And yes, we stay very firm here to maintain the T&Cs.

The next question comes from Ivan Bokhmat from Barclays.

First question would be just a little follow-up, Anders, what you've said on the new business CSM. I think you mentioned that the prudency buffer dampened into the performance year-on-year. But I'm a little confused because I thought it was already implemented from Q4 2023. Therefore, the year-on-year impact shouldn't have been that visible. Maybe you could expand on that point. And then I have two other questions, if I may, please. One, could you perhaps talk about the sensitivity of your earnings to the currency movements because you have, on one hand, Swiss Franc costs. On the other hand, of course, weak dollar might help top line. And the third point, I mean, considering that we're talking about insurance revenues on P&C, probably down a little bit year-on-year. I'm just wondering if that carries any implications for the growth in the capital requirements? How should we think about your capital generation? Because clearly, ROE remains very strong. Does it mean you'll generate more capital than we think this year?

Okay. Maybe just to clarify on the first one. You're absolutely right. I mean the uncertainty allowance was already built into the new business CSM a year ago. So that's why I said, it remains stable. I think the benefit of it is coming through now, didn't come through before because remember, what got released last year was CSM from the previous year. So I think that was a bit more, I think the point there, but you're absolutely right. On the insurance revenue with the FX and the currency sensitivity, I think you're right. Look, I think we are a U.S. dollar company. We generate about 50% of our business in U.S. dollars because that's the U.S. exposure. The rest is spread on various currencies. Swiss Franc exposure is mostly through expenses, but that's on a relative basis small when you look at the total claims expense. So net-net, a weaker dollar is actually positive for Swiss Re. And so I think we -- yes, for us, this is fine. And one point I would like to mention here as well is when it comes to liabilities and assets, we keep them at the same currency, really match the currency so that we don't have a currency exposure there. But overall, a slight -- a weaker dollar is obviously a slight tailwind for Swiss Re. And then I think your last point was on capital generation relative to, call it, lower insurance revenues. The first point I would make is lower revenues doesn't mean lower profit, as we mentioned before. I think you see that the overall results are strong and not impacted by the lower revenues. And by that, I think you should not see an impact on capital. I mean capital really is an outcome of the earnings generation. So that should be strong also going forward.

The next question comes from James Shuck from Citi.

I'll try and get my Anders and my Andreas is there around. I think, Anders, I just wanted to ask about the revenue and the netting off of the profit commission again. It seems to only impact Q1 from what you're saying and no impact through the rest of the year. But I guess if you're messing them off, then it's essentially like a 100% combined ratio in the P&C Re division. And I'm thinking about what your guidance was for the combined ratio for full year so the below 85 versus below 87, which is the target for the prior year, so two points of improvement. Is there any impact from this accounting reclassification in the year-on-year change? And is it already in there below 85% target? So that's my first question. Secondly, for Andreas. Obviously, it's a cyclical business, property reinsurance, so net cat reinsurance in particular. A number of kind of peers, if you like, primary and other insurers putting good store on the ability to compound earnings growth even through a soft cycle. I'm interested to see or hear what levers you've got to be able to manage your net income, not so much EPS because we all know you've got a lot of capital. But in terms of that net income, how you can actually manage that through a soft cycle and what ability you've got to compound earnings as rates come off?

Maybe we start with the first question on the revenues versus also combined ratio. And maybe again, just to reiterate, we see the biggest impact year-over-year in Q1. And as I mentioned in the remarks, for the remainder of the year, we would see a very muted impact because we changed the methodology during the year. So it's not 100% in Q1, but the majority is in Q1. I think to your combined ratio question, yes, of course. I mean this is mathematically goes straight into the combined ratio, but this is reflected in our planning. So this is also something that we already -- when we did the guidance, I think we, obviously, were aware of and then have built in already.

On your second question around cyclicality of certain lines of businesses and then how can we ensure that net income is sort of secured. As a matter of principle, we -- when we do cycle management, we look at the current portfolio composition. And then we do a 5-year forward-looking approach, take a 5-year forward-looking approach, assuming certain scenarios around rate developments. And depending on in which lines of business you're playing in your portfolio, there are various cycles. Admittedly, property is a very competitive market. And there, we can say that we are pretty large in property as far as our portfolio is concerned. And then to offset this, we look at a portfolio composition and growth areas that are decorrelated with the property cycle rating cycle. So that's point number one. So that means growth specifically in certain areas that are healthy and not correlated. And we have mentioned a few lines of businesses in the past. And we have mentioned again, specialty lines, but also credit and surety in certain aspects and accident health and so on. So should we then reduce the property portfolio because the rates are come again -- falling into areas where we feel that they're not adequate anymore, risk adequate, then obviously, you end up with a cost issue and with stranded costs, et cetera. So in order to address this, we have taken measures in all parts of the businesses to now continuously and proactively look at also our cost position. So notably, yes, there are certain fixed costs that you're stuck with when a property portfolio goes down. But it will also rebound again. But my successor at the CorSo CEO position, he has taken a very proactive approach by streamlining the structures and at the record high level, a 19th consecutive quarter of consensus speed. That was the time when he said, now is the time to really prepare for maybe times that might be a bit more difficult. So cost is becoming a strategic lever and we're building this in very systematically at overhead level, group overhead level, but also within the businesses. So I'm very satisfied with the progress made in this chapter as well.

The next question comes from Shanti Kang from Bank of America.

So the first one is just on CorSo, which obviously delivered a very strong combined ratio of 88.4% this quarter, and that's tracking well below your 91% or lower guidance. So I was just curious how sustainable the current margin levels are in the light of the softening rate environment and whether or not you're seeing different rate softening impacts at CorSo level than perhaps on the reinsurance side? So just any information on that? And then my second question is more generally about the U.S. liability market. You might have seen that Chubb has recently put pressure on market participants to reduce direct or indirect exposure to litigation financing. And I was just curious to hear your view on that, if you think that's the right approach. And perhaps, and as your predecessor was quite focused on actions coming from the primaries to shift conditions in U.S. liability first in lines that are subject to social inflation. So I was just curious to get your view or your comments.

Okay. Thank you very much, Shanti. Maybe I'll start and then Anders, if you have something to add, please welcome. On the CorSo pricing levels and sustainability of pricing levels, it depends really in which markets you are. And if you have lost prone accounts, then obviously, this has to be taken into consideration. So we take it case by case almost. And we recognize the risk profile of insurance like we also do on the reinsurance side. So good risk management, proper risk profile has always been recognized. Now having said that, on property and cat, in particular, pricing levels are at a healthy level. And I think this is also here to stay. Yes, it is competitive, and we might see maybe rate reductions. But again, here, structures are very important. And we see a trend that insurers in particular, the corporate space are taking premium out of the market, the insurance, the value chain and our self-insuring more and more. So that means captives are becoming more important. But again, here, that's a sweet spot for Corporate Solutions. That's where we are market-leading in tools like parametric solutions and captive solutions in our ART unit. So rate increase you will definitely see in casualty. But you know that we have a very prudent stance on casualty because we still believe it's not reflecting the exposures really that we carry, which leads me then to your second question, U.S. liability. Yes, we have always said that with the changed terms and conditions in particular attachment levels, I think it's the prime insurance companies who have to think about how to deal with this in particular in relationship to their insurers. I welcome any constructive effort to address the abuse of tort system. That's something that -- and we've been very vocal about this, you know that we published Swiss Re Institute publication last year on this. And if Chubb in particular, made this effort, I can only applaud them. I hope this will have a positive impact and maybe create a constructive discussion environment, which leads then to bring liability back to where it should be in the sense of insurability, not only affordable, but actually insurability in the U.S. So I'm applauding Evan Greenberg for that.

The next question comes from Faizan Lakhani from HSBS (sic) [ HSBC ].

The first one is on the P&C Re combined ratio. Within that, you've had favorable net prior year development. I wanted to understand, a, how much of that is simply the roll off of the new business uncertainty allowance? And secondly, within that sort of big picture, how willing are you to sort of release PYD in quarters where large losses exceed your budget? Or is this fairly mechanical? And the second question is on insurance revenue. You provided a sort of steer in terms of what the underlying revenue growth was in P&C Re. Just thinking out to 2026, given the fact that new business CSM is flat to slightly down. Should we assume the insurance revenue growth for next year should be flat to slightly down as well?

Yes. Let me start with the first one on the P&C Re question, combined ratio question, reserve release question. I think what you will see and what you should see is that through the -- let's call it, more conservative approach with the initial loss pick and the uncertainty load, as time goes by, I think you should see, everything else equal, a reserve release. And this is an approach that would be very natural. Obviously, in a year that you have a higher -- an above average claim where you see the offset for that. I mean you would have to claim, you would have the corresponding reserves. But in the long run, you will see that the reserves from the more prudent approach at the beginning will release. Now can I allocate the $1 to [ uncertainty ] load versus prudent loss pick? No, I cannot. But I think you will see that this will come through over time. So I think that's the approach. I think that shows then the resilience of the company. I think the second question was on...

Yes, maybe I can get that, which comes back to the basic statement that we always made that we're not steering for revenues for top line. That's very, very important fundamental. But having said that, and I can come back to the target liability portfolio approach. There, we definitely identify growth areas, focused growth areas. We don't want to be everything to everyone. We're steering for bottom line, and we're steering for resilient portfolios. But at the same time, we analyze also in which markets do we have market-leading positions. And obviously, we would like to protect the market-leading position, which means based on the technical excellence in underwriting, you will also look for opportunities to expand. We have enough capacity to deploy into attractive areas. And that's exactly what we do with the TLP. And you will see that we grow in certain areas and very specific focused manner. And I can again now mention the same lines of businesses that we have been mentioning all along, and certain specialty lines, in particular. But I also am a believer in nat cat. We are a leading capacity provider in nat cat. We tend to say always volatility is a friend because we manage volatility and we help insurers who can actually not carry the volatility, and that's where we want to deploy our capacity where it makes sense and where both parties benefit from it. But I can't look into the crystal ball and give you a '26 number.

The next question comes from Vinit Malhotra from Mediobanca.

Yes. So I would like to ask two questions. One on P&C Re top line, one on Corporate Solutions man-made. And one follow-up on the inflation risk pointed out by Andreas. So on the top line, just to clarify, I mean I've heard your answer a few times. I'm just trying to think that are you suggesting that despite this quite visible top line effect, the technical result outlook should be unchanged? So in other words, the combined ratio would have been better than what people might have expected before. And I mean, I know you've answered a few times, but just -- I mean, if we did look at the rest of the year, P&C Re being flat, we would get to about 8% below consensus, P&C Re revenue for the year. So obviously, to get the mathematical very simplistic since we have to ensure that combined ratio -- we have to hope combined ratio is getting better. So that's a very simple answer is what I'm hoping to get. Second thing is on the man-made which in the past, various occasions, various insurers will usually tell the market that there is no pattern here. And is it a safe assumption as well for your man-made losses, which were quite materially above you in CorSo. So just looking for the same confirmation, really. And lastly, Andreas, just to check we did say a few times that the environment is very uncertain or very -- and inflation risks are there. And just wondering how big is this in your mind for what you can see today? Or is it just a plan that you want us to be aware of?

Okay. And on the P&C Re side. For your first statement, yes, you're correct. For the second statement, I wouldn't go there so far, yes. So -- but that's correct, your statement. But we said we want to meet our targets. We set out the targets. And we also said that we're confident that we will achieve the full year 2025 targets, and that includes all the relevant KPIs that we've put out, the combined ratio for P&C, as we mentioned. On Corporate Solutions, on the man-made. Well, there is no such thing as a normal pattern that you can see. You maybe find some correlations depending on the economic cycle, the macroeconomic cycle and situations you find in certain industries. But this is a volatile book, and we manage volatility and we make provisions for that. And sometimes you have more activity beginning of the year, which doesn't mean that the notifications are coming in at the beginning of the year. Very often, you find exactly in very complex insured corporate structures, reporting lines -- reportings are late. And then before the year-end closes, then suddenly, you'll find people and companies reporting the losses in December. That's why we also thought about this seasonality effect that we built into the prudency also. So no real pattern. Does it make us nervous? No, it doesn't. And because those are very normal losses. Underwriting was good, and these things happen. On the third one, around the uncertainty that I was just mentioning. Look, there's no secret. It's fluid out there and just take the topic of tariffs, what can you really rely upon. It is changing every week basically, and maybe even every day or so. The point is we have -- we need to anticipate almost and be quick in reflecting all these changes in our models, in our views and how do we see our portfolio. We've got a task force working on it, and every new information is put into our models and then into our scenario planning. We cannot change our assumptions every week. So that's why we feel we're well equipped. We're not getting nervous. We don't see a direct impact of, for instance, tariffs, tariffs changes, but definitely an indirect impact coming through inflation, for instance, that would have to be reflected into our costing ultimately. So that's how we look at these things. We have, as I always said, strategic patience, we don't have to panic.

And Vinit, specifically on the man-made losses in Q1 for CorSo, the long-term average in P&C Re per quarter is about USD 75 million. That's a good starting point for CorSo as well, even though, as Andreas said, there's no -- it's very volatile per quarter. So clearly, Q1 was above. Operator, do we have any more questions?

There are no more questions from the phone.

With that, thank you for your questions. Thank you for your interest. Should there be any questions after this call, please do not hesitate to contact any member of the IR team. Thanks again, and have a nice weekend.

Thank you.

Thank you.

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