Talanx AG (TLX) Earnings Call Transcript & Summary

Okay. Good morning to everyone. Welcome to Talanx Capital Markets Day 2021. I'm Bernd Sablowsky, and I will guide you through the day. Particularly, a warm welcome to all those who are following us on the screens. Before it gets too exciting, I will bore you with some formalities. It feels quite unusual that we have an event where we meet in person. So this is a 2G-plus event, i.e., all people attending in person are either fully vaccinated, recovered, and we did additional tests before admitting people to this room. So that's just so everyone knows that we are adhering to the rules. And other than that, there's a bit about data privacy. This event is being recorded. And with your registration, you accepted that. If you wish to withdraw your content people attending the room, you have to leave now. I wouldn't recommend because it gets interesting. And for those on the screens, you either mute your mic or you turn off your camera if you don't want to be a part of this recording. Other than that, for those on the screens, you are with us via MS Teams. And please use the hand raise feature when you want to pose a question to us, and I will make sure that those questions will be addressed. The day will evolve until noon, roughly. We have divided it in 2 blocks. We will start with Torsten Leue, our Group CEO; and Jan Wicke, our Group CFO. They will give you an overview on where we stand with the delivery of our strategy and our financials. Thereafter, you will have the opportunity to ask questions. After that, Edgar Puls, the CEO of our Industrial Lines business; and Ulrich Wallin, who's the Chairman of our Specialty lines business, will give you an overview of the Industrial business, again, followed by a Q&A session. After a short break, we will have our 2 CEOs from the retail operations, both in Germany and abroad, Wilm Langenbach and Christopher Lohmann, guiding you through where we stand on our retail business. So that's how we plan to do the day. So enjoy, and I hand over to Torsten.

Yes. Good morning from my side. It's great again to talk to a camera since 1 year. I think everybody of us has to talk into camera. But even better, it's great because I welcome in the name of the Board, you here as well in the room. And I guess some of you had the first business trip since 2 years. I remember yesterday evening, you told us, and I think this is great that people still can meet physically. And the whole Board here is not virtually, we are physical here. So I especially would welcome everybody in the room. So before I start, it's about people, it's about people business. I would just like to present my new Board members here. They are sitting here on my left. This is Wilm and Christopher, who joined us. And they brought great energy to our company, and they will show you the energy in their presentation. It's about German retail business, Christopher; and Wilm about the international portfolio in the retail business. They have a great energy in the team, and I'm more than happy to have them here on the board. So starting where you see here the phases, starting with our agenda. We are in the strategic cycle, 2019, '22, and we want really to show you how we delivered. I think a promise is a promise. It's a nice proverb where we are. And for sure, next year, we may probably hear the same town, I don't know yet, we have to see, but we will give you a new strategic cycle targets. Until then, we have to show what we have promised, if we delivered. We had 3 promises in 2019. So they were, a high level of profitability, 800 basis points at least above risk free. We had a 5% on the average growth in the EPS, and we have the dividend payout ratio, IFRS earnings [ 35% to 45% ], but the main part is the DPS at least stable year-on-year basis as an attractive payout. So what we have done first is return on equity. You can see, this is the 8.2% that what we promised at least, and we are in 2019 was close to 10% there. Last year was corona, so we have not been there. It's clear, 6.6% not achieved the targets. Corona effects have been significant. And in 2021, we forecast around 9%; after 9 months, 9.2%. So again, achieved the next year, this is our outlook, 10%, roughly 10% with next year return equities, so double digit, that should be our future, generally speaking. Second, why it comes from that is EPS. It was strongly growing. And here, maybe to see the path, you can see from EUR 850 million toward a [indiscernible] outlook now in the EUR 1.05 and EUR 1.15. This is at least 5% average gross EPS. And if you remember, at that time, probably in 2018, the basis we started in the path was EUR 850 million, but we had to clean up our industrial portfolio. So real profit in that year was EUR 703 million. But we know, we started EUR 850 million, that what we originally promised at that year. And from that, we go on to 5% path. This is one message. If we take the one, the 5%, we would be, for sure, above EUR 1 billion, but not on the range we've given to you. The range is higher than the 5%, so we are above that. And then one thing you cannot see in this slide is the quality of the path because the quality of the path is how much resilience, how much volatility buffer, which we mentioned in several quarterly calls to you, we have built up this. We will show you today as well. So there's a path which is above our results, what the path is and the quality of the path is very high. You will see that. And the third one is the payout ratio. And here, really focused mainly on the right side. Key for us is that we pay dividend at least on a last year basis, and we have done this in the last years always increasing by EUR 0.05. In 2020, we could not do so because of corona effect. Several countries have dividend bans, but at least it was stable of last year. And then basically, as a result, comes whatever dividend payout ratio we need for that kind of KPI we give to the market. So the [ EUR 150 million ] favor was even corona times done. And as you see, many really problems to pay out dividend that's all repaid. So let's say, on a year-on-year basis is the same. So how we did it with our strategy? We have our strategic house, nothing changed here. And maybe I run to shortly about the 3 points plus the sustainability. So first is capital management; second is divisional strategy, more focus here; and third, digital transformation. Starting with the capital management. What we have said in 2018 is that we want to grow our cash pool. And after we have grown to EUR 1.5 to EUR 2, we will change, we will revise our dividend policy. We are close here. And you can see that we will propose to the general meeting a EUR 1.60 next year. So basically catching up the lost EUR 0.05 we have lost in the corona times so that we really are always on the track growing, growing, growing the dividends. So it's clear that you can expect with a new strategic cycle next year a revised dividend policy because we are basically close to what we promised. The solvency ratio as well, you can see that we are above the target range. And you can see that it's [ 210 ]. It's more or less whatever happens in these times, Corona, whatever you see capital markets, we are more or less stable in the dividend. Between the times, there were some fluctuations that if you observe to the peers to the competition, you can see that due to our low better approach because we have low market risk, the fluctuation is much less than you can observe in the market because there's less risk here in our balance sheet. So solvency ratio slightly above target range within the market and stable in spite of troubled times we had. Then this is something which is a kind of a challenge that you're in the insurance sector, where you talk about value stock, about dividends to say about a growth stock. And -- but if you see that picture here, we are growing. We're growing 6x faster, 6x faster than peers. So this overall since 2012 is 54%. And you see, especially in the last years, we grew significantly above the peers. So yes, we have a growth stock, but yes, we are in insurance sector. So therefore, kind of difficult to explain that. But we are a growing company, which is a good feeling. And especially we are growing on the profit side, and there was always discussion what we do with the primary insurance. And here you see, and I will stop a little bit here on that slide, what I meant before was the quality of the earnings per share path. On the left side, you see since 2018 to '20, our prime insurance profit increased. The key figure is 42% of the total profit of the group coming now from primary and not just [ 31% ]like 2018. So this is the first message. So 42% of the primary is the total profit of the company. The second figure, that was other quarters in the last years. We showed you or we told you, we will have a volatility buffer. We showed you about conservativeness and so on because we are sometimes in some business model volatile environment. And therefore, we need this kind of resilience in our best estimate reserves. We built that up in these times, and this has a number. This number is EUR 1.02 billion is now resilient reserves within our best estimate. Meaning, we starting with EUR 500 million, and we have built up more than EUR 0.5 billion additional reserves, which we believe is needed for such a volatile business model. So that's what we mean to is [ bullet of ] buffer. Every quarter, we told you here the numbers, and Jan will tell you a bit more about it. That shows you the quality of the part of the EPS growth we have done in the last years. We could have done differently. We decided to go this conservative path. So now coming a bit to the segments. My colleagues will talk us much more to you. When it comes to Industrial Lines, we had 2 things in 2018 to do, a turnaround. This is done. You can see the figures with 98.5%, always having in mind the volatility buffer we have built up. This is done. We have done a growth initiative in the Specialty Lines where we said we want to grow here. We want to really be a global player. And we have said we want to have EUR 2.1 billion premium here in 2022, end of 2022. Now we have '21, and you see this EUR 2.5 billion, we are already above. So it works really very nice. Forward-looking, double-digit return on equity that is clear for us in Industrial Lines. We want to be a global specialty player and innovation, we want to be a leading partner for the industry. In Retail International, we want to be 4 out of -- we are going to be top 5 in our top 5 markets. In motor, we have achieved it already in 4 markets. And going forward, let's say, to write the next chapter of the international portfolio. Therefore, [indiscernible] 25 or 2025, it's double digit in the return on equity. You see again this segment, double-digit equity and top 5, not just in motor, but in other nonmotor markets as well. Wilm will tell you more about it. This is a very ambitious next chapter. Retail Germany, we have 2 things to deliver. One was the course. Since 2015, those prime insurance in Germany did not make profits. So we increased our target and said we want to have end of 2021, the cost targets since many years, we communicated at least EUR 240 million. And the EBIT, our outlook for this year is EUR 150 million, so we delivered. And then second, on the life insurance, we needed to capitalize more our life insurance portfolio. And you see the EUR 269 million. So we're in an area where you can say we did so. So stabilized. Now going forward, we want to grow, GO25, stronger together. Christopher will tell you something more about it. And again, here, therefore, we start always is the same message double-digit return on equity [indiscernible] 25. We want to be the leading SME and Bancassurer in Germany and focus and derisk a bit in life more. The reinsurance side, you have had here at this Investor Day anyway with Hannover Re. But just draw attention to one figure I like very much, from EUR 19 billion strong growth to EUR 27 billion. So if you see EUR 8 billion more premium, organically for somebody, this is everything. So just EUR 8 billion more profit, not yet profit, the turnover. And with a double-digit return on equity, I mean, you know what Hannover Re delivered and the valuation showed this outperforming. They're clear outperformance and the whole culture is they're really eager to outperform the future. against the peers again. Third point was digital transformation. Here, we always decide between skills, bundled and get ready. Skills, yes, everybody talks about data. We hired 200 risk consultants, especially in the IT area. So we really push those innovations there. we get bundled. We have gained a tender when we are now with Deutsche Bank together for long-term partnership exclusively. We have BancoEstado, the biggest bank in Chile as well again to tender where we really now a long-term partner in Chile as well. So we know how to bundle and get ready, 75% of our system we shut down, and this is really who works in companies not a task which people like so much. You have to get ready, really for this future, let's say, business models, you have to shut down your systems. 75%, we did our legacy system cleaned it up, you can say. So it's a huge work. It's not really sexy, but it needed to be done to migrate systems or to shut down. Last thing is the sustainability in our strategic house. On the right side, you see that our ratings improved. MSCI and CDP rating, we are on the A&P level. So we are there. We are within the market. We really worked hard on that. And you see that what we promised here is basically so far things you can see on the slides. Net Zero operations worldwide until 2030. And you see that on the shorter side until 2050 and as well on the asset side, we want a net zero. And important is here, want to say long-term target importance engagement. What you do in between, you can see it in COP26 that it's about transparency and about what is in between. What's in between with us is we withdraw, [ 38 ] was the call. Risk and in the asset already in 2025, there will be a carbonate reduction of 30% in our portfolio. So there's commitment in this ESG topic quite significantly, and this is increasing, as you can see with us and within the market. What is important to you to know that since this year, we are sitting here together with her because our remuneration system is totally linked to the targets we have set. When I was telling you 10% return equity in the group or in all segments, Well, this is our main target. The group return on equity we have in our remuneration schemes. We are totally linked to the share price, be it absolutely relative and sustainability targets. So there's complete aligned now with the targets we have communicated on the Board foundation system. [indiscernible] business just before the corona crisis, we had created with 4,000 people purpose. And this 10 words, you can see there, together, we take care of the unexpected and for entrepreneurship means a lot to us. This together lift and brought us through the difficult times we had a very, very positive mood, and the results are for me breath taking. It's not just about the numbers where we delivered, it's about the culture, the energy we feel in the company. This is really remarkable. It's very difficult to transport that feeling, but it is there. Then my key message is we delivered what we promised. We increased our dividend, and we give you the outlook even next year with a new strategic cycle, there will be a revision as you see where we have developed it and what you can expect. And we boost our ambition in prime insurance 10%. This is in '25 for each segment, our clear commitment. And we have updated our outlook for '21 and '22. You have seen during the year, we increased our outlook for this year. This year is now EUR 900 million to EUR 950 million. We increased another time because we said it will be the upper end now. Until the end of the year, so 2 times, we had to revise upwards our outlook. And next year, as I said before, with the high quality of our plan, talking about resiliency reserves, we even forecast on this whole EPS path far above 5% growth per year on the average. So therefore, next year, it's far above EUR 1 billion, is above our past and it's, for sure, 10% return on equity for the group already. With that kind of numbers, we're talking about numbers, I hand over to Jan.

Thanks. Good morning. I'm really happy to be here and to see you in person and to those who are sitting on the screen, it's a pity that you cannot join here. But I hope I can bring across also to the screen what I wanted to say. With regard to my presentation, I want to cover 4 topics. The first topic is I want to explain how we calculate the return on equity and compare that with the methods our peers are using so that you can compare apples with apples and find out who is performing better. Second, I want to spend a few words on our dividend policy and on the solvency target capital so that you get a better feeling what is in our mind when we reassess dividend strategies for the future. Then I would like to give a few words on the Green bond framework, which we recently published. And finally, and this is the main topic of my presentation, I would like to dig into some parts of the IFRS 17, 9 transition, which is coming up. I want to focus on the asset side, SPPI Fail and SPPI Pass assets. And on the reserving side, I would like to explain our claims reserving policy. And I want to bring transparency into the resiliency, which is embedded in our best estimate, what is there already there? And what will they be in the future? What is our policy here in order to provide you not only with transparency, but also with some comfort with regard to the fact that we will want to deliver reliable future earnings? Let's start with the first topic, return on equity. For the past 2 years, we reported to you on average for the 2 years 8.2% return on equity. So it's more than 800 basis points above risk free. So you can tick the box. We reached our strategic target, and this is despite Covid. If we compare these figures to those of our peers, you will find out the figures look pretty small. And this is due to the fact that most of our peers adjust the return on equity figure in their calculation. And the most common adjustment there are various ones is that they adjust for the OCI, they deduct the OCI funds a return on equity. And if we were to do so, we could also show a 9.5% return on equity, using this method. Well, you would like to know how we calculate the return on equity, and we do it straightforward. We take out of the P&L, we take the net income, and out of the balance sheet, we take the equity. And if we calculate it, then it's 8.2%. And we do -- if we do so for our peers exactly with the same method, and the peers is that Allianz, AXA, [indiscernible], Munich Re, Swiss Re, [ VIG ] and , then our peers would add up with 6.7%. So what you can see is we clearly outperformed [indiscernible] so far and our ambition for the future is that we continue to do so. Next topic, dividend policy. So I have nothing spectacular to say here. With regard to the dividend payout ratio. Torsten already told you, we delivered with an average 48% on that one. Second, we announced that we would reassess our dividend strategy if we reach a target cash pool of 1.5 to 2x annual dividend payment. End of this year, we will not reach that one. But we have decided that we will reassess our dividend strategy in the light of the upcoming IFRS 17, 9 transition. So the next Capital Markets Day, we will have a new dividend policy in place because the dividend payout ratios, they have to be recalibrated anyhow to the IFRS 9 and 17 standards are changed anyway. So -- but there is one rule in our dividend policy where we want to stick to and this is for sure, this is stable or upwards. And I just want to underline uplifts what you have seen that we will increase our dividend already this year to EUR 1.60 and stable upwards will be the rule, which will remain unchanged. Next topic, before I come to the next topic, I want to give you some thoughts about how we think about the dividend policy in the light of our Solvency II capitalization. As Torsten already told you, we are clearly above 200 with other solvency rate. End of Q3, we have been at 2% or 4%. It came down a little bit from 2.10% after the second quarter due to our growth, but it's profitable growth, and we feel comfortable with it. Why do we like to be in the upper end or even slightly above our target range? Maybe this need some explanation. It's a simple reason. The Solvency II standard is a market valuation balance sheet standard. And given that we have ultra-low discount rates and most market values are derived from discounted cash flow models, small events in the far future, due to the low discounting factors may have mega changes or big changes in the market value in your balance sheet and your solvency balance sheet. And therefore, the volatility of the Solvency II capital adequacy ratios is pretty high. It's lower for us compared to the peers, but it's still pretty high. And therefore, we feel comfortable to be in the upper half of our target range or even slightly above it. So with regard to our future thoughts on dividends, we will keep in mind we want to have a capitalization in an area where it is right now. Third topic I want to address is the Green bond framework. Here, I just have a few words. You can see the green bond primer on our web page. We have certified our framework by Sustainalytics. They certified that it's aligned to both to for sure the green bond principle, but also for the European Union taxonomy regulation. And to the best of my knowledge, we are the first in the insurance industry to have a green bond framework, which is a [indiscernible]. And this enables us whenever we want to issue green bonds and to support the sustainability strategy, Torsten has just mentioned. So -- and now let's come to the most important topic of my presentation. IFRS 9, 17. You all are aware of it, and we discussed it yesterday in the evening quite often that IFRS 9 and 17, the transformation will really fundamentally change the accounting for the insurance. First of all, I would like to state that from my point of view, I'm really looking forward to this change because I believe that the new standard will enable us to show much better the profitability of our business that will provide for a new insight, which makes it easier for you to compare insurance group among each other, but also which will help to compare the insurance industry to other industries. On my personal point of view, the whole insurance industry is undervalued. If I look at the price earnings ratios of our industry and compare that to some other industries, I'm somewhat surprised about the valuation levels we are currently in. And I hope that IFRS 9, 17 will help us to get higher valuations here. But I know that every transition creates uncertainty, what is coming with the transition and so on. And therefore, we will provide you with in-depth guidance at the next Capital Market Day with regard to our transition that you have such full transparency on that one that you get guidance also what is to be expected in the near future. During the course of 2022, we will do parallel ones in the accounting every quarter. We do that in order to provide for ourselves stable processes in accounting because it's really a complex transition also for us internally. And as of today, I just want to focus on 2 aspects of the IFRS 9, 17 transition, which is on the asset side, the accounting of our investments, where we have to distinguish between SPPI Fail and SPPI Pass assets. And on the liability side, with regard to our reserving policy, -- And with regard to our reserving policy, I also want to provide you with some transparency about the resiliency, which is already embedded in our best estimates, we are booking. We learned something from Hannover Re. You are used to that when they publish their so-called redundancy figures. But we also learned in discussion with auditors that for the future, you better speak of resiliency embedded in the best estimate. So let's start with the asset side. If you look at our investment portfolio, roughly 90% of our investment portfolio will be an SPPI Pass assets. What does that mean? So all assets will be valued fair value. But SCPI Pass assets will be valued fair value through OCI. So they do not create so much volatility in the balance sheet. And this 90% is more or less our fixed income portfolio. And if you look then at the fixed income portfolio, we have to provide for every quarter for our credit risk portioning. But this has to be done after the expected credit loss principles. They have 3 stages in terms of credit risk provisioning, and 99% of our 90% in the [ ECL ] Stage 1, where you have just to do a little credit provisioning and where you have rather low volatility. So my message overall is 90% of our balance sheet will not provide for higher P&L volatility in the investment income. What about the remaining 10%, the SPPI Fail assets, private equity funds, real estate funds, a yield if they have managed in the fund? We have to book them fair value through P&L, and they will provide for volatility in the future. But if you then put it into context, and we did some analyzers, we look through the annual report of all of our peers. You will easily find out that the proportion of SPPI Fail assets at Talanx is much lower than those of our peers. And therefore, we expect to have lower volatility derived from it, and we have set up some measures in order to manage this volatility going forward. So this is, I think, the most important thing with regard to IFRS 9, that there is some volatility related to the SPPI Fail assets. If you then go to the liability side, we keep in mind that the whole asset side is mark-to-market. So it's a fair value approach, and it really did make sense but also the liability size liability side is marked to market value. And therefore, for the future, if you compare it to IFRS 4, we will have to discount our P&C liabilities, the technical reserves. And this obviously will lead to slightly lower results if the discounting rate is positive, it's negative. It's the other way around. I just have to mention that. On top of this discounted reserves, we will have to book a risk adjustment. And those of you who are familiar with Solvency II, I know the concept of this margin is pretty similar. It's something like a hybrid in between liability and equity. About what numbers are we talking when we're talking about P&C reserves? So if I look at our balance sheet at the last one, we had roughly EUR 40 billion net claims reserves in P&C. And given the importance of the P&C reserves, was steering results also. We have set up in our company a really huge reserve in governance. So how does it work? Let me run through it. It's very simple. First, the local actuaries and the local reserving committees are setting the reserves. They have to apply an actuarial framework, which is also controlled by internal audits that everybody applies it. Then year-on-year, the auditors do sample testing in order to provide opinions that we are adequately reserved. And then, and this is specific, we have external actuaries who are reassessing more than 95% of our portfolios. And that provide us with a second opinion, what the best estimate, market valuation of our P&C reserves would be. And then, as a fifth step, we compare the external actuary with you, with our internal actuaries view. And it's normal that the external actuaries propose us less reserves than we have booked internally. So there is a positive delta. And we call this positive delta resiliency embedded in our best estimate. And why is there such a resiliency reserve? I think there are many good reasons for it. First of all, if you are, for instance, an actuary in Hungary, where you have just a small P&C portfolio, and also the local regulators look on that, then -- and due to this small portfolio, you have higher volatility. It may be better off to have a little bit excess reserves there in order to manage the volatility of the nature of the business. If you have a lot of long-time business and so on, you find some reasons here on the chart. So there are many reasons for having that. But there are also limits to reserving. And we have set out a reserving framework for IFRS 4, and we will continue to have the same reserving framework for IFRS 17, which is rather simple. If, in any of the accounting units, the external actuaries tells us that the reserves are insufficient, we ask them immediately to do additional reserving to get to the 0% threshold. If a unit -- an accounting unit is back to 0% threshold, but the lower comfort range, for instance, if you have a highly volatile business, we give the unit time to reassess their reserves and to build up volatility buffers for the future. This, for instance, was the case for Industrial Lines. Given the nature of the business, we were not satisfied with the level of additional results. Then you're in the comfort zone. But we even have some units where the reserves are too high. And then we please them to release the reserves so that we can use elsewhere to make use of the capital upstream, which is then related to it that we can use of the capital adds there. So we have those. Our reserving policy balances between capital efficiency on the one hand side and avoiding future volatility on the other side. But where do we stand now? Torsten already mentioned, from 2018 to 2020, we have increased the overall resiliency reserves in the group from 6.3% to 6.8% of the P&C reserves. So we have increased it. And if you look into the details and you find out that Hannover Re has decreased it, but Hannover Re has a very huge well-diversified portfolio. So they are very well in a comfort range, whereas in the primary insurance group, we have increased significantly. You see that in the light blue bars, the reserving levels. And for the group as a whole, we are very comfortable. What do we plan to do? We plan to provide you in the future with the following reporting format. So you are already familiar with what Hannover Re did and what was highly appreciated that they published, once in a year, their so-called redundancies, which will be called in the future resiliency reserves, which is roughly EUR 1.5 billion. In addition, we will give you the figures. Torsten has already shown it that we have another EUR 1 billion resiliency embedded in our best estimates in the Talanx Primary Group. And if you add the two up, then you will not reach Talanx's net because in Talanx's net sales, in addition to something included, which is the holding, Talanx Holding, which is a reinsurer, which we just started, and we have a very prudent reserving approach because for steering the group, it's very helpful to have some room to maneuver also on top of the group. And so there are little additional reserves also on the holding level. And this level of reserves leads to our assumption. We feel very comfortable with it. And this should provide for reliable future returns. When do we want to publish these figures? We just want to publish these figures not quarter-on-quarter or just once in a year. And we plan to publish it in the first half of the year, and most probably, with the Q1 results, so that you then have, for the year-end, also the resiliency, which -- some information about the resiliency embedded in our best estimates or with the invitation to the AGM. So this is what we plan to do in order to provide you, not only with transparency that you can assess the performance of the past year, but also to provide you with comfort of our future dividend payment, about our ability to absorb external shocks. For all of that, this resiliency embedded is helpful. Let me summarize. I hope I could explain to you that we have shown superior profitability compared to peers if you look at the return on equity standard, and this was despite that we have grown much faster than our peers and this was despite that we have built up resiliency reserves in the same period. And this really shows the operational strength in the past year and the progress which was made in the business units. Second, our dividend policy will be reassessed, yes, but it is stable or underlines that upwards. And finally, we provided you with some information on our reserving policy, which balances between capital efficiency and avoiding future volatility. I believe it provides for reliable future returns. So -- and now I think Torsten, the two of us, we are ready to take questions. Are we?

Absolutely.

Thanks, Jan. Thanks, Torsten. So now it's on you to put on the heat. Torsten and Jan are happy to take your questions. Who wants to push forward? We have Hannes and Anna and Karsten, who have handheld mics. They will bring it to you so that our listeners and followers on the screen can also hear loud and clear what you want to ask. Darius, please.

My first question is on your net income target for 2020. It looks like you've been building reserve [indiscernible] in the last few years, which was somewhat of a headwind to your profitability. You said this is finished now. So I'd like to understand if your EPS growth expectation, being unchanged from previous plan, is conservative because you no longer have this going forward? That's the first question. Second question, I appreciate it might be too early to discuss this, but are you able to give some color on what would the dividend policy review entail once you reach the cash buffer target? Is this mostly to be of the payout ratio, or is there anything else we should think about?

So first of all, we feel very comfortable with the level of resiliency embedded in our best estimate, we feel very comfortable. In some lines, there are still small steps to be done. In other lines, they are already more than sufficient. So overall, we feel comfortable. And therefore, we can show better the profitability going forward, and Edgar will explain a little bit about the progress we expect in Industrial Lines, 1 percentage point increase in the combined ratio year-on-year. So this is to be said with regard to that one. Second, with regard to the dividend policy. We have a close look at our growth in the dividend policy. So we want to remain in the upper half of our target solvency ratio. This is set. Next to that, we have a change in the accounting standard. And therefore, I'm a little bit doubtful whether the old payout ratio really makes sense, but we will consider that and reassess that during the course of next year. One thing is for sure, it's stable or upwards, and as Torsten has said, we underline upwards.

And maybe you -- there is logic when you have -- as we have seen in the past with the resilience you have built up, and this is connected to the return on equity, 10% and 2025 ambition in each segment. So it was logically that we can do now much more aggressively go that way because resiliency is there.

All right. Dominic?

Three it's from me. Just a quick question on the transition to IFRS 9 to 17. It looks like you're going to have a risk adjustment and, of course, the redundancy -- sorry, the resilience reserves. It feels like that's too late of resilience. Will you reassess the resilience reserves when it comes to applying IFRS 17, so you're not sort of doubling up the sort of the buffers? I apologize for asking a question I should really be asking at next year's Capital Markets Day. Second question, I guess, just following up on Darius' question. Could you give us some sense of the impact of the -- on the combined ratio of continuing to build the resiliency reserve over the last year or two? I mean, was there a percentage points in terms of impact on the combined ratio from adding to that reserve? And then just a third question. On the cash, could you just help us understand the drivers of cash remittance up to holdings? I think the sort of Hannover Re dividend, I suppose, is the simple piece, Industrial Lines profitability is simple. In German Retail, I'm guessing that there's a combination of profit and capital generation. Could you just describe what sort of the constraints are on cash remittance out of Retail Germany?

Okay. First of all, with regard to the IFRS 17 transition, I think the overall framework for the resiliency embedded in our reserves and what we regard as comfort zone really depends on the business portfolio. So if you have a volatile business, you need more resiliency reserves to cope with nature of the business as if you have a very well-diversified, big stable portfolio. So we do not have the same yardstick for all units. So that's the first thing to say. And yes, we will reassess it under IFRS 17, but we already did some calculations, and they looked pretty much the same. So I do not expect too much change here. The second question was, how much has it cost the combined ratio. So if we just do it now by rule of thumb, yes, it's EUR 500 million over the past years. So that should be, on average, more than 1 percentage point in the combined ratio for the Primary Group, yes? if you look at it, it was the Primary Group. And as for the group as a whole, including Hannover Re, there, we had also made use of this volatility buffers embedded. And I think it pretty -- makes sense because what we learned from you and what we learned with the Hannover Re is that you do not like the volatility so much, yes? And so we believe it really makes sense. And finally, you asked for the remittance of Retail Germany. And I just can say, Retail Germany, as after Hannover Re, has the highest cash contribution in the group, and this is for a simple reason. We wanted to de-risk Retail Germany in order to bring the capital more to those places where we can grow and show higher return, and we did so. So after Hannover Re, Retail Germany had delivered most during the period we just looked at.

And just generally, overall, the remittance ratio increased, let's say, roughly from below 40% to up 60% in the last few years.

Okay. So we have online questions. A question comes from Michael Huttner. Michael, please, over to you in London, I believe, right?

And yes, well done for the targets. And mine is really a silly question, and really relates to Monday. And I'm sorry, I missed the call a little bit. How come the solvency of the German Life units rose so fast? I think it was 160% at the year-end, and we're now at 269%, that's kind of a de-risking question. And the other one, you set this target EUR 1.050 billion to 1.150 billion net profit (sic) [ net income ] for 2022, and you've got all these lovely resiliency reserves. So when you set these targets, how much uncertainty do you allow for? I mean, is it dependent on the weather, remaining good, not having another flood, like we had in Bernd, or are you so confident in all your reserves that you could be like Six Sigma confident, just to get a feel?

I'll just answer, Michael, and thank you for your applause. It feels good. Just the second question, regarding the outlook. I mean, we have always a CCC disclaimer, which is clear. This will remain. We cannot avoid it. And the rest is basically as usual. So what you can say, I mean, we showed you this, a more resilient picture, let's say, than 2, 3 years ago. So from that point of view, you could say, well, this is -- even if they would be CCC, we can do as much more on that area. But it remains like it is, CCC.

And with regard to the solvency ratio at Retail Germany, if I might answer Christopher, I think, yes, it has improved quite significantly, but not just during the course of the years -- of the course of this year, but over the course of many years in the past, due to a huge number of de-risking measures. Actuarial in-force management was a main driver of it and where you see the positive effect over time. In addition, yes, there have been some assumption unlocking, which is always due in the third quarter. You see it also in the IFRS accounts in the third quarter, but this is on a regular basis. It's always the case in the third quarter.

Okay. Next question, another online question, Thomas Fossard, please.

2 or 3 questions from my side. The first one would be related to IFRS 17. I was quite interested by your comment, Jan, that the IFRS 17 would reveal higher profitability of some of your business lines. So I know that you can't be more precise at this point in time. But just if you could touch upon where you believe that under IFRS 17, there will be some hidden profitability revealed? And, Yes, that directionally will be interesting. The second question will be on the reserve defers. Actually, I was quite amazed to see that you managed to go up to 8.4% in the Primary Group, while in the past, Hannover Re Reinsurance, which is maybe more diversified, but which tends to be a highly volatile business or potentially more volatile business as your Industry Lines, in the past, was 7.1%. So I just wanted to better understand how you defined the 8.4% in terms of targets, and why now this is reaching a level which is significantly above Reinsurance. And the third question will be related again to this resiliency reserves, so the 8.4% in Primary Group. Can you say how much or how you intend to utilize this resiliency in case of a shock? So how much of the shock -- potential shocks will you be able to offset, or would you be ready to, yes, offset from your volatility during the quarter of the year?

Right. So first question was with regard to IFRS 17, whether there is hidden profitability. I think the current accounting standard, IFRS 4 provides for a lot of, let's say, complexity, accounting mismatches and so on, which makes it difficult for investors to understand insurance profitability. And I believe that the new standards, after we all get used to it, will provide for a better communication basis for our profitability. It's not about hidden profitability, it's about clearer explaining where the profitability is coming from that you do not have to explain with every quarter. We have to explain the Life results, yes, due to huge accounting mismatches, which are in there and so on. This will come to an end. So it will become better. And this is what I see as a big advantage going forward. Second question, this 8.4%, I just can restate what I said. We feel very comfortable with it. And please keep in mind the following: the portfolio of Hannover Re is much bigger; it's very well diversified; and we have a lot of small portfolios; and very often, we have also local regulators who want to see a certain kind of resiliency in the reserves. Keep that in mind. So the primary book has much more accounting units for reserving compared to Hannover Re. That was the second one. What's the third one?

Utilize by shock.

Utilize by shock. Well, first of all, the good news, this is obviously not the only buffer, which is in the balance sheet. But we can make use of it. And what we would try to do is we will always have a future view on that one. And the most important target is the dividend policy stable or upwards. So we would not like to put that on risk.

All right. Another online question. Vikram Gandhi, if you could turn on your camera, unmute, and tell us what you would like to know. Vikram?

I hope you can you hear me all right? .

We can hear and see you perfectly.

Perfect. So more than dividend ROE target for all 3 businesses is wonderful. I'm just a little curious as to why the cash pool target or the outlook stops at 2023, and we don't have an equivalence figure for 2025. So that's question one. And secondly, I think there was a comment in the media this morning that you do not plan to divest Life portfolios. Just wondered why that should be the case. I mean, the interest rate environment certainly seems to be getting more favorable. So any thoughts around that would be very helpful.

So I'll answer the first, and Jan will be second. Well, we will come up with a new dividend strategy, as we said, when we revise our strategy anyway. And reflecting that, there will be then the future of cash flow after 2023 really shown as well probably as an outlook. So it's basically due to timing, yes? Jan?

And the second one, or Christopher can answer this one, too, but we are currently not planning to divest Life portfolios. And Christopher will come to that in his presentation later on, too.

Okay. So anyone in the room having a question? Marcus -- Roland, sorry, Roland Pfänder.

Two questions from my side. Do you see any extraordinary effects on the cash pool going forward? Then on the internal reinsurance, could you comment just on the first beginnings of this activity? How is it developing? And what's the view on that?

I think, Jan, you can...

I can make those. So first of all, no extraordinary effects, but we always have to keep in mind that we cannot steer the local regulators. In some countries, we have dividend ban despite highly capitalized companies, whereas the dividend ban was in for the whole industry, and the answer of the regulator was, yes, we know you are good, but due to the fact that we have one rule for all, you cannot pay cash up or there's no capital upstream. So this is what you always have to keep in mind. And you need room to maneuver around. I would like to bring across that we have room to maneuver around. So I'm positive on that one. Nevertheless, local regulation really matters.

And maybe, just to add on this remittance ratio, doubled, basically, I showed you more or less compared to last years. And we are really keen to make sure. Remittance ratio is a big topic in the group.

Second question was?

RiTA. How is RiTA working?

RiTA. Yes, RiTA is internal project name for the Reinsurance at Talanx. So to be honest, I think the start with specialty business was excellent timing. The start with RiTA was, at least for our reinsurance partners, not a good timing because in 2019, we had COVID and business closure, claims. This year, we have [indiscernible]. So in total, the internal insurance was really hit by this part. And for the future, therefore, we have to expect also higher reinsurance payments, what we have to do, given the track record of the past years when we started this RiTA. But we make use of it in terms of reserving. We already provided for a little volatility buffers also on Talanx [indiscernible] level. I already mentioned that, and you can see that also in the numbers there.

So you could frame it differently, those difficult years will provide good future growth potential, profit potential in the future. That's the timing question now.

Yes. So we had twice negative results, and we plan now for positive ones. .

Vikram, we can still see your hand up. Is there a follow-on question? Do you have?

Sorry about that.

All right. No worries. Michael has another question. Michael Huttner.

Yes. It's really brief, yes. In the resiliency, COVID basically hasn't paid out. My guess is you still have huge IBNRs on COVID. How much of that do you think will likely become Resiliency in the next couple of years?

Of the COVID reserving, that's really a difficult question. I think it's a little bit too early. Maybe with the next annual results, we'll reassess it on regular terms. So we also will reassess the COVID reserves, but I think this is really a little bit early.

And this whole thing around COVID, I mean people talk about the first wave now, fourth wave, actually. So we all can say we don't know what COVID will bring to us. That's really the effect we have to consider. No business judgment on that one. That will be too unsafe.

Okay. So there would be room for 1 final question, if there was any. [ Darius ].

Just 1 on Solvency II. I'm just trying to gauge, what do you think is the direction of travel for your Solvency II ratio? I assume it will go up over the medium term even with your growth outlook. So how should we think about your Solvency II ratio growing when it's already above the upper bound of your target range? Is that potential for extraordinary capital patriations in the medium term at some point when you look at the dividend policy? I'm just trying to gauge how you think about that excess.

So first of all, we want to support with our capital base, our growth. Because we strongly believe that we are able to have profitable growth, and this -- that we will monetize our growth also in the near future. So if it's slightly above the upper range, then it's okay. If it's too far above the upper range, that gives room to maneuver with regards to the dividend policy.

Okay. All right. So that was our first Q&A session. Worked quite well, I believe, with all those following us on the screen. And now next is Edgar Puls and Ulrich Wallin, introducing you to the latest news on our Industrial Lines business, Edgar.

Yes. Good morning, and also a warm welcome from my side to all of you here in Frankfurt and also, of course, to all of you participating virtually here by your Teams. Torsten already started with this. We gave in the last 2 years, 2.5 years, quite some ambitious promises about turning around the business. We delivered, and I will show you some more details later on how we also measure that we delivered. And the second promise we gave was the strong growth in specialty business and growth, of course, not only top line, but mainly bottom line. Also here, we delivered. And then allow me to give you comments about talking about the way looking forward. Before I start with this, it's all about people, as Torsten said, let me introduce some new team members at the HDI Global Board. One year ago, Mukadder Erdönmez joined us, more than 20 years' experience worth -- the most experienced liability underwriters. I know very successful in the past, very successful in the future. And when you want to see the shine in his eyes, just talk about international liability business and you would see it. And once you may meet him in the Swiss mountains going out for hiking, that's where he recharges his batteries together with his family. Also, since 1.5 years on board is Andreas, more than 30 years' experience in international commercial business, Chief Underwriting Officer, commercial roles, so a lot of different roles. He's a real executor. -- believe me. Once you meet him, he's a real executor. And in his hardest year privately, he ran more than 10 marathons for me. Honestly, he's a marathon executor. Once you meet them, you may realize this too. Joining us, and I'm very happy that we have announced this last week. Ralph Beutter will join HDI Global Board January 1. Next year, he has more than 30 years' experience in International Specialty business. He knows everything about every specialty line in the world. And more than that, he has inhaled more than 25 years, the spirit of Uli because they worked together for 25 years and what could be better than that. Also joining us, January 1 next year on Board is Claire McDonald. Claire is also more than 30 years in the industry, very international, worked in different countries, worked for different companies. And she managed the turnaround of our U.K. business in less than 3 years, and she is a real straightforward people manager. And you shouldn't call her 6:30 in the morning because then she is out for work with her dog. And there she takes the energy for the day, at least that's what she tells me. And Christian -- and also, since Clemens Jungsthofel went to Hannover Re, he joined 1 year ago. He is real strategic thinking guy and also an executor. Whenever I meet him, and he has a lot of things on his desk, a lot of things going on, implementing new structures and strategies in is responsibility. We always ask ourselves where he takes his resilience from. And the answer I get every morning when I meet him in the office at around 8 after he brought his 2 young daughters to the daycare that I know where he recharges his batteries. So that's the team we are running with in the last month and as from January 1 next year, together with Ralph and Claire. And I'm totally convinced that we will not only continue the change in the spirit we brought to HDI Global to the Industrial Lines the last year, we will even accelerate it. So let's look back. The promise we gave with the 20/20/20 program 3 years ago was to make the turnaround in profitability. And we started with '17 -- in year '17 and '18 with combined ratios close to 110%. You can see that 2019, we had raised a 101% combined ratio, still above 100%. But then without COVID last year, 98.7% and this year, around 98.5%. So even in 2021, what is a quite year here when you have looked at net cat events, we managed to have the combined ratio we promised and we wanted to achieve. With this, also last year, we have been clearly above our peer -- below our peer average. Peer average was about 111%. We delivered 104.6%, even including COVID. And for me, very important, it's not a onetime or it's not a coincident. You can see that we decreased our attritional loss ratio. So we stabilized our book. And the book is much more profitable and much more resilient than what we had in the past. How did we do that? It's again easy. We just executed what we promised with the 20/20/20 program. And even more than that, we extended that to other lines of business. We had 55% price increases until last year on the property book. We did not renew roughly 15% of our book every year, so lines where we did not get the rates we wanted to have or we needed. We went part way. And the same for other lines of business. So we extended the 20/20/20 program actually -- or the profitabilization to all other lines. In average, by the way, we touched in those 3 years, every contract once and the property business in average twice, and we have 10,000 of policies. So it was not a selection, every policy was an average probably touched twice. Nonetheless, we managed to grow. Not only with the specialty initiative, but we also grew by rate increases, of course, and by new business because we saw quite some opportunities on the market. Specialty business was our next promise. We promised to grow and to deliver a good technical underwriting result. We managed to do that. The CAGR from 2019 to 2021 was 34%. And very often, we get the question isn't that too fast? This growth path with 34% CAGR. On the one-hand side, you can see that the market rate change was between 15% and 25%, though a lot of this growth comes from market change and from rate change in the market. But on top, we were a small player. We showed you that 2 years ago, we were a small player on the market, and we had a lot of room for growth. Ralph, at this point, Ralph Beutter said top line is civility, bottom line is sanity. So we fully focus on the technical results. That's a lot of focus. And also here, you can see that the CAGR is even higher in the bottom of it. So sum it up, it was again the right timing. We told you the story that Uli and Torsten, you said in New York at the airport, I think, 3 years ago. And there the idea was born to found this HDI Global Specialty, the right timing because the market is great. The growth target was exceeded, and very important for us, the technical profitability is on track. The third promise we gave is to reduce volatility. We already talked about that. How did we do that in Industrial Lines? On the one-hand side, and Jan already elaborated about that on that. We increased our volatility buffer in the last years. And the second thing is that we strictly followed our plan and path to reduce high volatile risks. And you can see that when you think about the impact of Harvey, Irma, Maria on our books and when you think about the impact of the NatCat events this year, Ida burned, you can see it in our figures that we reduced this volatility. The combined ratio was not only decreased when you compare '14 to '18 to '19 to '21, but also here, you can see that the volatility of the combined ratio, we had 14 points from the low point to the high combined ratio fall into '18, we decreased this to a spread of only 3 points in the last 3 years. So now looking forward, I would like to give you 5 highlights from our new strategy, a deeper insight into that. We announced our new strategy last year with 5 main pillars and 2 enablers beneath. I want to give you an insight into 5 of those 7 strategic fields. First of all, we want to become a global player. We want to be a leading specialty insurer, want to be underwriting champion, one of our core pillars, of course, cost leader and talk a little bit about the digital transformation. What does it mean, global player for us. You know we started as a German company, developing over Europe to an international company, but we are still not globally. So we defined 3 buckets: our core markets, growth markets and opportunistic markets. And there we have different growth targets, of course, planned bottom-up on the market cycle. And in addition, you can see specialty. So we strongly believe that it will take us far less than 10 years until we're a real global player. Already, we are an international player. The leading specialty insurer, and part of this is proven in the past that we wanted to use the growth synergies we have in the group. Now we are optimizing the structure. Optimizing the structure means that as from the end of this year, beginning of next year, we are 100% shareholder of HDI Global Specialty. We've talked about that beginning of this week. And with this, we have a lot of new opportunities. We can take the structural synergism and this leads us to new ambitions, and Uli will give a deep dive into that in a couple of minutes. Underwriting champion. We are an underwriting company. So underwriting champion is one of our core pillars. We want to be best-in-class underwriting company. To make it more tangible for you, we -- I would like to give you some examples about measures. One example is large account pricing. We take for large lines of businesses, 25% to 30% of the premium. It's a limited number of contracts, but 25% to 30% of our premium into a large account pricing committee. So we take it from the countries, from the entities into a committee, and it's a larger group discussing what is the right rate for the client and what is the right offer we would like to give to the market. And the next one is data quality. We started a data quality improvement project 2 years ago. Of course, when we talk about underwriting, we are always talking about this magic triangle between underwriting, claims handling and risk engineering. And data is key. Data is also key to make the right risk selection and the right decisions in underwriting. We have an underwriting academy because we want to lift all underwriters worldwide per line of business to the same standard of underwriting. And finally, also portfolio screening process, I'll give you insight on the next slide. Do we see that it works? Yes, you can see the rate changes and the rate changes we achieved in the last years were above market average. And also the NatCat derisking. The example you can see here is the annual average loss for large U.S. windstorms, we decreased our exposure in the last 2 years by 50%. And this is what you can also see in our results, have a look to the impact of either, for example, in our books. What does make it even more tangible for you. I mean when we talk about large portfolios, we do not accept small portfolios to be potentially unprofitable. So we screen every year all portfolios in the world on a yearly basis, even small portfolios with only EUR 5 million or EUR 6 million gross written premium. We screened them and identified portfolios which may have a problem and which may not be profitable. And we started 2019 with this process. We identified 8% of the profitable job potentially unprofitable. Meanwhile, we had less than 4%. So we do not accept any portfolio in the world to be potentially not profitable. The next pillar of our strategy is cost leader. And believe me, we had intensive discussion if cost leadership is part of the strategy. For me it's crucial. Cost leadership is a game changer. Cost leadership is a real differentiator in the market. So we decided to put it as one of our main pillars on our strategy. We have 7 points below with our peer average due to lower administrative cost. We have a lean operating model. We have reduced acquisition costs. And of course, we also generate some fee income. So that's key, and that's part of the genes we have in the company we do everything not to [ change ] this. When we talk about digital transformation, and Torsten already talked about that from a talent perspective, now focusing on HDI Global. Same structure. Get skills. Get bundled. Get ready. We managed in the last years to in-source more than 80 specialists. So we want to get rid of having external consultants, we focused on having the specialist on board. More than that, we have new digital solution teams. Thinking from a client with digital solutions and problems from our clients, and we are investing a lot into IoT. So here, we have more than 20 ongoing projects with corporate partners. It's not that we try to find a solution and then to offer it to our clients. We develop those solutions together with our clients. And in most of the cases, linked to an insurance product, but in other cases, also linked to service products. That's from our perspective, clearly the future. And the simplest case IT structure, Torsten also talked about that on a products level, HDI Global, we shut down 150 from less than 500 systems we have in total. So that's also a clear path to have a lean structure. What is our way forward? Very clear, 20-20-20 return on equity about 8%. Combined ratio as promised, we want to decrease our combined ratio every year by 1 percentage point, combined ratio about 97% and the gross written premium growth by 8%. The ambition, and that's very important and clear, our ambition is an RoE of 10%. And that means we increase our ambition level by more than -- up to more than 10% in 2025. We have promised what we have delivered. And clearly, we see that in the figures. And we continue to accelerate the growth in commercial and specialty business. And I strongly believe, and I want to give you this commitment from the entire Global Board, the commitment is there to deliver the performance we promised as we did in the past. And with this, I would like to hand over to you, Uli. Elaborate then on the specialty business.

Thank you, Edgar, and good morning from my side. I'm really quite excited to be here, particularly seeing you all here, and at least those on the screen, I can't see but they might be able to see me. So that's really fine. I'm also quite happy that I have been invited back after my first experience on the Talanx Capital Markets Day 2 years later. Last year, of course, we didn't have one. And that shows you that our specialty business have done quite all right, I would say. So we have been able to develop the business a little bit like we have foreseen it when we put the initiative as a joint venture between HDI Global and Hannover Re, under the heading of Talanx together. When I was talking to you 2 years ago, I said what we want to achieve is a win-win-win situation, meaning that everybody should win and nobody should lose. And of course, the winners should have been Talanx, HDI Global and at that time, still very close to my heart, Hannover Re. And up to now, I can tell you that really happened. Everybody is a winner because we were able to grow the specialty business within HDI Global Specialty profitably. Talanx got their profitable growth from HDI Global Specialty with a higher contribution of the profits to the Talanx shareholders. HDI Global was underweighed on specialty business and is now developing a balance between specialty business and commercial business that is in line with the best peers, I would say. And even Hannover Re won, which might sound a little bit surprising because they had given up half of the business. But of course, within Inter Hannover, which was the nucleus of HDS, the business could not have grown the same way it has grown -- grown within HDI Global Specialty because of potential conflicts with reinsurance clients. So Hannover Re with HDI Global Specialty has a lot more premium and profitability than we would have had if they would have continued with Inter Hannover. So what have you done? I'm not too sure here I'm on the right slide. We lifted at our specialty business from what we had in HDI Global and Hannover Re, there are none of the entities, there was a lot of focus on specialty. I mean the business from HDI Global, the specialty business that was -- I mean, given to HDI Global Specialty was just about EUR 300 million. So you can see, if you look at the overall volume of HDI Global, the specialty business was really tiny. And also with Hannover Re, Hannover Re wrote some specialty primary business as an annex to their specialty reinsurance business and also as HDI Global was not in the space, there was no real conflict within the Talanx Group. But of course, the ambition was limited because it was never core business. By lifting it up and focusing on the specialty business, we achieved 2 things. First of all, we were able to grow the business; and secondly, we were able to improve the profitability. And both of these things, of course, very important. Let's look at the numbers. You can see that we had a very good growth with a high CAGR. That of course was also due to the fact that we were very fortunate to start the initiative at the beginning of 2019, which was actually the beginning of a hardening market in the specialty lines. Why was that market starting to harden? Because of bad reported results. If you look at the Lloyd's results, they come out of 4 to 5 years continuous losses, but also other specialty carriers had relatively significant negative results. And that continued for most people into 2019 and 2020. So we had the opportunity to get new business without having to fight with incumbent insurers for long part. And not only did we get the business, we also were able to employ underwriting teams in many of our locations, such as our aviation team in Canada. We have an aviation and travel team in Australia. In London, we have a bloodstocks team. We have -- and we have a new financial lines team, for example, in London as well. So you can see that we were able to add new businesses to HDI Global Specialty, just due to the term life that we have seen in the market. And that is the basis for the growth. It also allowed us to be selective as a business. And therefore, if you look at the closed years, which is 2019 and 2020, and you compare that with other commercial and specialty insurers, these combined ratios that are kept to double digits, I think are comparatively quite good. Nonetheless, we are not happy with the 2020 result because it's a combined ratio over and above 96%. It has to do with COVID. COVID largely because we do contingency and film business, and that's where we got quite a lot of losses, but short tail. I mean there will be no further losses in the future from that. And I mean 2021, we are well on track hitting a combined ratio around the 95% mark. We are quite confident that, that will be possible. No, I have to go one back because -- I should also, of course, then come back to our '22 target. I mean already in 2019, I told you that for 2022, we expect an underwriting profit, including and covering all expenses, of EUR 100 million. And we are on track and delivering that. So I hope if I'm invited back, which, of course, I'm never quite sure, I will be able to tell you that we outperformed the EUR 100 million as well, as we have outperformed our targets so far. Then, of course, nothing ever stands still. And so we have further development, which is basically evolving in line with the strategies of Talanx, HDI Global and Hannover Re. And this is that we put the specialty business fully into the primary group of Talanx and it's now being more integrated in the HDI Global. On the other hand, we keep the joint venture character because we want to keep the momentum of the specialty business. We also want to still being able to rely on the underwriting expertise in specialty business from the reinsurance side at Hannover Re. And therefore, Hannover Re will continue to be involved in the governance of the company as well as being a substantial quota share reinsurer. At the same time, there are clear opportunities for synergies as far as expenses are concerned, together with our colleagues at HDI Global, and there is also opportunities to better service the brokers and clients that we are doing business with, with a more homogeneous approach to them. Particular with brokers, of course, it makes you more important if you have more business with them. But also with the clients, I mean, we are really together with global are advanced top shop where that's necessary. There's not with all clients necessary, but it helps us with developing the business as well. So we see this as a very positive move. As you see here, it will also be positive for the Talanx shareholders because in a growing profitable business, the profit that will be generated for Talanx shareholders will be 87.5%, being 75%. This is the primary group, but Talanx [ AG ] also owns like half of Hannover Re. So that is positive. And of course, we have the ambition at HDI Global Specialty to contribute substantially to the profitability of HDI Global because the HDI Global Specialty is consolidated. And of course, our ambition would be to be even more than 1/3. But Edgar will make that very difficult because the commercial business profitability, as he told you, will also grow substantially. You can see our book of business. It's a very, very diversified business. We have very many different lines of business that are not accumulating with each other. So they are independent from each other. So we can allow significant volatility in individual portfolios like bloodstock, for example, or in our space account. Because if you look at the overall book, it's a very value verified book. And therefore, we also can't have high retentions in our business when it comes to third-party reinsurance because the diversification protects that. The 1 area where we have a big exposure, which is on CAT because you write some binding authority U.S. CAT business. That has hurt us a little bit in the hurricanes in '20 to a lesser extent in '21. And the reason for that is that we reduced our CAT exposure. We're actually having it for the next hurricane season in the U.S. We are also reducing is a little bit in Australia because we want to have volatility in the individual segments of our business, but we do not want to have volatility on the overall results. And therefore, we like exposures that balance out each other. We don't like peak exposures. That's really what we are doing there. And you can see on the geographical split, we are pretty much heavy in Europe, which is very -- it's probably a little bit unused for specialty carriers because most of them on high probability -- a high proportion of their portfolio in the U.S. That is because we have a relatively large and very successful branch office in Stockholm, for example. And also in countries like the Netherlands, Italy and Germany, of course, we have a very good and profitable strategy businesses. So we are underweight in the U.S. We probably try to rectify that over time. That might also include M&A. It's nothing specific at this point in time, but we are definitely looking there. We just recently have set up an underwriting agency for management liability and financial lines in the U.S. where we are a shareholder, so that we keep a very close control over that agency. We have set it up with a market practitioners, which we know from Hannover Re times over decades, and he has always produced good results, has a good track record. And so we have set that up and that will create U.S. growth for the future. Then we are also -- I mean, the rest of the world is basically Australia and Canada. So you can see that we are also a little bit underweight in Asia. And we will be looking at maybe the Singapore market as well. But we are overall happy with our relatively high portion of European business because it tends to be more stable definitely than the U.S. business. Well, we are more short tail than long tail. And even on our long tail business, it's mostly claims made because it is D&O, it's professional indemnity, it's lawyers' liability. And that's not [ claims made ] is at least accidental. I mean we have a leisure and entertainment book, for example, which is performing very well but it includes liability parts, but that is accidented. So it's not like products liability or other very, very long-tail casualty lines or excess casualty, for example. We haven't got excess casualty on our books. And as you can see from the split of lines of business, it's rather broad. I mean what's here on casualty is -- the liability is largely D&O, E&O as I said, some sports leisure and entertainment, some agency business including some specialty personal lines business like snowmobiles, for example in Sweden, which are particularly profitable if it doesn't snow with global warming because then they can thrive. And on the property side, of course, there is some binding authority property, but also like film studios and also our [ PAC ] business and our bloodstock business is bracketed here in property. We have a very long -- over many years, established aviation portfolio, which we increased these new underwriting units in Australia and Canada. We have Cologne from Gerling and HDI-Gerling and Talanx. And of course, we have our colleagues in Stockholm and London that write that business. And that is really the split of our business. As you know, we write the delegated authority business and single-risk business. In general, I would say, our single-risk business has been more profitable than our delegated authority business. As a result, we try to increase our single-risk business, but that's not to say that our delegated authority business is unprofitable. We just know it's a very, very difficult class of business. I know that business since the '90s, most of the time with bad experiences. But I think we have found a business model for delegated authority business that can be profitable. Good example is our largest agency, which is a Swedish agency by the name of Svedea. That will be about EUR 140 million in premium this year. We have a growth of 20% every year, and we have combined ratios in the mid-80s. So can be good, but it can also be very negative. So we have to be very careful when we write it. And therefore, we have less growth ambitions in that business than we have in the single-risk business. This is the -- of course, I mean, I've talked what we have done up to now and where we are going. This is our ambition for 2025. We see further growth in the business based on the particulars in the new underwriting centers that we have established, they have inherent growth in them. At the same time, you see that this growth is not being as deep as it has been in the past. And the reason for that is that we fully expect that the market will start softening. We are not expecting that we will see the kind of increases that we have seen in the last 3 years going forward. But we will -- we are expecting to keep a profitable level of the business. But of course, if competition increases, you have to be more selective, and that's why we're building up our technical skills all the time. We have a large number of rating tools in our company. We have what we call a [ DV-5 ], the economic where you delivered of each business that we write in order to be fit for a soft market because we have the clear ambition that we also want to deliver 95-or-better percent combined ratio also in a softening and competitive market, not only in a hard market. It's not the combined ratio target over the cycle, it's for every year. That's what we want to achieve there. And to sum it up, we have been off to a good start. We have delivered on the promise. There's a lot further to do. We have higher ambitions, as you can see, and we will be more embedded in the primary group for the benefit of everybody. With that, we are happy to answer your questions. And thank you very much for listening.

All right. Thanks, Uli. Thanks, Edgar. So this time, we start the Q&A session with an online participant. We have a question from Thomas Fossard, Thomas, please?

Well, yes, thank you. So 2 or 3 questions. The first one would be regarding the average rate adequacy or risk-adjusted rate adequacy of your portfolio. Can you comment a bit and given the repricing exercise, which went beyond the property lines, I mean what remains to be done in your view? The second question would be regarding a comment you made, Edgar, regarding lower acquisition costs compared to peers. And I was really trying to understand how this is made possible given, I guess, that your business is coming largely from brokers. So I was wondering how you managed to have this kind of cost advantage to peers which is so significant. And the third and last question will be regarding overall, what is or how you would define your USP in the market. I mean I think that for us not being in the insurance market, it's super difficult to assess. I mean, what is your ASP or how you differentiate yourself from the AXA XL or the AGCS. I mean any comment on that would be interesting.

Yes, Thomas, thank you very much for your question. Let me start with your first one. You asked about the rate adequacy. And you're referring to the 55% we achieved until last year in property. This year, we expect in most lines of business to have more than 10% rate increases for most of the lines of businesses. Property, definitively liability, that we -- that's what we expect for this year. The second question was about your -- about the sales cost, right? We shouldn't forget that we have still Germany is something like EUR 2 billion of our gross written premium book. And there, we have a strong part of direct sales business, which is quite -- has quite low acquisition costs. And in addition, we are very strong also in the corporate segment. In the corporate segment, we usually also have lower acquisition costs, especially in some parts of Europe. And here also, again, especially in Germany, we have some in-house brokers, and we also use those parts. And that's for your second question. And the second one, that's, of course, a good one. Again, Thomas, what about the USPs. First of all, I think we have a very strong international network. So we are there where our clients are, and we can follow our clients into the world; secondly, we have the strong local teams. We are not organized very centrally thinking. We trust in our local teams, and they have strong approach to the market, and we also trust in local people. So for example, you won't find a lot of expats as managing directors. We always have, in France, [ our MD ] is a French woman. So we trust our local teams. The third one from my perspective is that we try to create individual solutions. Of course, the client has to pay for it, but it's sometimes tailor-made, sometimes even handmade what we create, and we listen to our clients. We try to understand what the demands of our clients are, and then we try to find solutions for that. And I think when I look back, also, we could also get the price increases because we were pretty good in that. Does this answer all of your 3 questions, Thomas? Or did I miss something?

No, that's fine.

And this would maybe to add because this is typical to say for Edgar or Uli, I mean, he said trust by the way. And I think we are a people business, yes, you can say we at Hannover. We have low cost compared to the peers, a lean business model, fast process and all this. Yes, this is you can say on slides. But there's a lot of people, I mean, I cannot imagine so many companies where you find the former CEO of Hannover Re being very successful since 10 years, the numbers are critical in the sense of they prove if you're successful, not at the end of the day. And then saying, I like so much to work in this group and take off this specialty venture. And coming back to my roots where he started as a specialty underwriter. Tell me some companies where this is possible? This is down to earth. So there's no politic culture, this is direct culture and a lot of fun. So this is just a proven cookie why this is possible. Trust.

Next question, Roland. Mike is coming.

Regarding your specialty business, you are taking out a lot of reinsurance, not only, I guess, from Hannover Re, but also from other players. So will this remain on this relatively high level? And is this an indication still on possible volatility of the specialty business and you want to shield yourself? Or how should we read this? And on the Industrial Lines, if I remember correctly, I think you mentioned it in one of the last Capital Markets Days, that this reserve buffering you're engaged in might end in 2022? Is this still the case? Or what is the current status?

What I would say on the specialty add, we are not buying that much third-party reinsurance because most of what we buy is a success of loss. And we were probably on the proportional by even less. And the reason for that is that our business is relatively well balanced. So we can allow volatility is in the individual parts of the business. But for example, on our international D&O business, we buy a program excess of EUR 10 million. So we keep the first EUR 10 million net. And -- yes, we are quite comfortable with that. We also reduced our limits actually. I mean we're only writing EUR 15 million max now. We used to be EUR 25 million. But we could do this because the market was actually hardening and the capacity was being reduced by the market participants, so you can get more money for lower capacity. So I mean, as we haven't got too many peak exposures in general, the third-party reinsurance will not be that much. I mean, of course, there are lines like aviation where you buy comprehensive excess of loss program, but that's quite in line with everybody in the aviation market. And we have one of the other agency where we have a quota share for specific reasons. I mean, you shouldn't forget that Hannover Re has a large quota share, but HDS also fronts for Hannover Re. So there are some of the business in HDS, which is 100% fronted for Hannover Re. Therefore, the retention basically looks a little bit lower than it actually is. But the fronting business is rather stable. It's not growing. And therefore, the vast majority of the business is already and will be business that is actually managed by the HDS management team.

And then maybe to your second question, the reserve buffer. For me, it's very important what Jan talked about on the one-hand side, the majority of the resilience increase came from Industrial Lines last year. And secondly, when we talk about our path to the future that we want to reduce our combined every year by 1 percentage point buildup of reserve buffers included in that. So we won't slow it down or something by building up reserve buffers.

Okay. Anyone else having questions? Darius.

Two questions for Ulrich. So specialty is gaining quite a bit of potential in the European insurance space. Do you expect growth throughout the plan? Or is it more front-end loaded, while the market is kind of hardening? Another question, I suppose. You got into 95% combined ratio for 2025 and 2022, and that's essentially what's targeted for 2021, and yet rates accelerated quite materially. Is that because you're trying to gain market share? Or is it due to loss cost trends? And last question is one for Edgar. In order to get your 1 percentage points combined ratio improvement a year in the Industrial Lines, could you rely on the reserve releases from those reserve buffers that you've built? Or is it really that only for kind of high volatility, yes? Or is that something you can tap into in a more normal environment?

Well, on the combined ratio, [ Wise said ] continued to be at 95%. I mean it's not easy to grow your business very significantly and keeps the combined ratio low at the same time because your mix of business is almost very much geared to the newest underwriting years. And of course, in the newest underwriting years, there is still a lot of -- I would say, [ Bernd Ferguson ] reserving where you have your loss ratio picks that you pick. We tend to do that relatively conservative. So we are expecting that when those years run off, we will see an improvement in the loss ratios. However, as the existing business is so much smaller than the new business. The combined ratio will, therefore, always be a little bit higher simply due to the growth because, I mean, I think it's quite remarkable that we managed to keep the combined ratio below 100% and grow at that space. That, of course, has to do with the market. And your first question was on the specialty business in Europe. That there is competitive. If I get that correctly. Is that the correct question?

I'm essentially asking if your kind of growth outlook for next -- into 2025 is a bit more front-loaded, given that we experiencing a really hard market right now and then you said [ something swapped ] and a bit more?

I mean that's why we have grown very rapidly up to now, and we'll probably continue to grow in 2022. But then, of course, I mean, 2 things start to happen. First of all, in some of the areas of our business, we start to have, I mean, market share where it's more difficult to grow with still being very selective in what you write and what you don't write. And the second case is, of course, that we expect the market to become more competitive. And that also requires underwriting discipline. And therefore, you're absolutely right that the growth is front loaded. And then, of course, we will continue to grow but at a slower pace because I mean we are not growing for the sake of it. We are growing to increase the profitability. And naturally, I mean, if as the market becomes more competitive, the profitable opportunities tend to shrink a little bit.

At the end, there will be an ambition of EUR 3.7 billion below 95% or around 95% combined ratio. And we don't like normally hockey sticks. So we grow steadily somehow and not relying always on the long-term future. So this is basically general message and the 10% CAGR, which Uli and his team has given to you I think, still a reasonable number, double-digit growth in that area as it will be more competitive.

And maybe then, Darius, regarding your first question, I don't know forget correct. But of course, at the moment, we still have some -- we still see some rate increases also for the commercial part and for the loan specialty part. But as already also said, we will increase our resiliency buffer in those years. And partly, it will come, of course, from the rate changes and partly also from growth. I don't know if this is exactly what's your question? No. Sorry, could you hand in.

My question is essentially, if you can tap into that reserve buffer in the normal course of business, if there's no substantial volatility to get your 1 percentage point combined ratio reduction a year.

Okay. Well, of course, we can. That's what it's for. But it's, of course, not planned because at the moment, we -- as soon also as we try to plan to increase it. But of course, we can't use it. That's what we build it up for. And on, I saw that you're not fully satisfied maybe with my answer from your face because you asked for next year, and this may be also go into the direction of Darius' question. I think we are close to our target, but we shouldn't forget that also the resilience buffer is always a relative number. It means the faster we grow, of course, on the one-hand side, we have a little bit more diversification, means relatively we need a little bit less, but I won't tell you next year, we are there, but we are close to the target.

But what you also expect, of course, due to the conservative reserve setting that you will see underwriting -- I mean, runoff products in the future. Because certainly, on the short tail business, I mean after 36 months, often there is not that much leeway to keep reserves if there are no claims. So from that point of view, I mean, the development once you have built it up, that it comes out of the reserve is just happening. Of course, on long tail, it takes a lot longer, I would say.

All right. So there's one final question from our online participants. Michael, Michael Huttner, please. [Operator Instructions]

I'm sorry about that. So 2 questions. The first one, and it's really a broader question on -- not tough to address, but I would -- earlier, you said your targets and you've got the CCC, et cetera. But I worry a little bit about the increased cost of reinsurance, which seems to play a big role, maybe not in the primary unit, but definitely in Hannover Re and whether you'll be able to buy all the covers that you need that have been in the group in the past for next year? So that's 1 question. The other one is a very cheeky question. And I apologize. But -- and I'm definitely not the right person to ask it, it'd be more like my colleague who is a lady -- so there's not a huge amount of diversity at the Board level. And I just wondered if that might change on that area.

Starting with the question on the cost of reinsurance. We expect some minor increases, especially on the NatCat part, but this is already included in our plan for next year. In general, what we also see is that, against the trend of the reinsurance market, we had a better purchase of reinsurance. For example, last year, because we significantly improved the quality of our books. So this was really against the trend when we have a look also to last year. This is what we still expect also this year, maybe with the only exception of NatCat. Your second question, yes. I think this is on HDI Global, you mean for HDI Global?

I think on Hannover Re.

For everybody. So the question was -- is really, I suppose, for all of you, you're part of the Board, but -- and I'm not saying it's really a hard question for us, but sometimes diversity, it's not obvious that there's as much diversity at the Board level, but there might be.

Maybe just give you 2, 3 numbers because you like numbers. We have -- well, first diversity is a diversity of thought. It's not just about agenda question, right? So this is the first message. And we still believe that we and the Board have a diverse characters here. You can believe, if you just join our Board meetings, you will see what I mean with that, yes? And this was very important to get really different characters on the Board. So but talking about gender is probably what your hit on, head to. We have 30% of women in leading positions. If we talk after the Board levels, right, 30% can be improved. And for sure, we have many tools in place internally to improve that ratio. For example, we said for each new succession, we need at least 50-50 replacement when it comes to the gender question. And when you commented on the -- you see it already in the divisional Boards, it's in Hannover Re, we have women on the Board. We have now 2 at team Germany, 2 women on the Board. We have now a Global, we have a woman on Board. So not talking about outside of Germany in our entities. We have several examples like this. So it's coming step by step. And as well as you will see them more and more, even when it comes to the talent sport, there's a future as well, we will see.

Okay. So that was our Q&A session on Industrial. We do a quick break, a 10-minute break. So for those on the screens, we restart at 11:05, and coffee and a bit of a bite is outside. Thank you. [Break]

Okay. So here back again from Frankfurt. Now turning to Retail, Wilm Langenbach and Christopher Lohmann just grabbing a drink over there, are presenting what we have to tell on our retail activities. And after that, again, we have Q&A sessions where you can raise your questions and that will run roughly until noon. And thereafter, we invite you for business lunch. So now I hand over to Wilm.

Thanks very much, Bernd. It's a great pleasure for me to be here with you, a great honor to talk about the next chapter of HDI International, Retail International going forward. I'm very pleased to be here, and good morning from my side as well. Torsten has already talked about the success story of Retail International in the past in terms of the promise delivered, reaching in almost all core markets in motor, a top 5 position, always been in the last years around a 7%, 8% ROE. So a very solid improvement that you have seen. Before I go to talk about where we came from and where we want to go from here, let me present to you as well and my team at the HDI International level with whom I have started to work over the last month since I joined end of last year. And of course, I did work very heavily as well with the local CEOs and local management teams. But I'm very happy that Christian Müller has stepped up to the level of the Board. He brings over 20 years of experience to the -- from the Central and Eastern European markets and has a proven expert, has already worked on a number of transactions in the past, Amissima, but also in Turkey, for example. Nicolas Masjuan is joining us with a lot of Latin American experience and already see the good relationships, the experience, the know-how about the local markets that he brings to the table. One of the things we worked on jointly very heavily with the local team in Chile was BancoEstado, and I think we want to continue in that direction. So the team is there. The team is fully committed not only at the HDI International level but also at the local level with all our local management teams to build the next chapter. Where did we come from? Torsten Leue has actually started the whole journey of Retail International since 2010. You can see that the EBIT has grown 10x to roughly EUR 260 million, EUR 270 million until 2018, has stabilized a little bit since then, mainly due to economic headwinds. And so I think you can appreciate the financial solidity in terms of earnings but also in terms of reserves that Retail International has already shown to you in the last years. Combined ratio is around 95%, 96%, have been the pillar of Retail International. You also know that we've grown through acquisitions in a very successful way and disciplined way. The most noteworthy, from my point of view, when I looked at it, is actually WARTA, which is a tremendous success case in Poland and continues to be so. I think the third pillar that we definitely want to continue to build on going forward is actually our decentral structure, our entrepreneurial approach towards our local markets. I think that helps us a lot to be relevant and the most adapted to the local opportunities that we have. Going forward, we do want to build and further reinforce a couple of elements around technical excellence in terms of outperforming our peers in our local markets. We do want to also increase our diversification. I will talk about that a little bit more. And of course, as you can imagine, we have worked a lot along the last years, especially the last 18 months around our digital transformation, but that, of course, will also continue. And I'd like to show you as well what we would like to add to that journey going forward, focusing a lot on the impact that digitalization can bring for our clients, for our partners and for ourselves. We did, of course, take a look with all our management teams across Retail International as well, of course, with the group overall of Talanx, are we in the right regions? And I'm happy to confirm that we still see lots of growth potential, attractive growth potential in our core markets of Europe, especially in Poland and Turkey, but as well, especially in Latin America with our 3 core markets of Brazil, Mexico and Chile. You see here the estimations for the size of the markets that we already have there. You see us where the expectation is in terms of economic growth for those markets, which is higher than what you would find, for example, in the eurozone. And you see as well that the penetration rates, especially in non-life, are still relatively low. So from our point of view, there is still lots of room that we can capture, lots of growth that we can capture and want to definitely continue to focus on. Latin America as well as Europe are our core focus areas that we want to continue to strive. However, we do, of course, see as well or have looked as well, are there other regions that are relevant for us or should become relevant for us going forward? And there, we've actually clearly said some are not. For example, we do not want to go into industrialized Asian markets, like Japan or even Australia. We also don't want to go onto the large markets of China and India. But we are looking at very carefully now to see if in Southeastern Asia, there is potential room. These markets are of relatively similar size. And so we look into that if that could be a further avenue beyond the focus in the next few years on Europe and Latin America that could also help to further build the next chapter for Retail International and also bring further diversification. So what is our strategy? You know already the target ROE is definitely to become a player that has an ROE above 10%. And we do want to reach not only top 5 positions in motor, we do want to reach in our core P&C markets or non-life markets, top 5 positions because we do believe that's important to be strategically sound and viable in the future and offers also attractive growth opportunities for us. How are we going to do that? We will be focusing on the technical excellence. That's why you see here outperforming peers. We do also want to increase our diversification. There is significant room that we can build. We're a very strong motor player, and we want to continue to be so, but we have room to go beyond that. We will continue with the digital transformation. And of course, these are 3 elements that we have pretty much in our own hands. But we do have room as well to grow through still inorganic moves and especially as well partnerships that I'd like to talk about as well. When you look at the first part, outperforming peers, what do I mean with that? Originally, in 2010, Retail International had a combined ratio of roughly 105%. Over the years, it has gone down to 96%, roughly 95%. The last 3 years, we've always been around 95% combined ratio. So this is a very solid overall technical performance. While the market might seem to be quite volatile, actually we have been able to deliver continuously very stable combined ratios. Going forward, we do see still some further measures that we can take to even further improve. On the one hand, we can optimize our portfolios and continue to work on data-driven pricing, especially in the retail lines but also in SME. We are continuously working on digital claims management, which will also give further advantages on that side. And at the same time, we want to continue our solid reserving that we already have today, which is very solid as well our efficiency focus, cost leadership focus that we actually have in most of our markets. And with that, focusing on those key levers, we want to raise our ambition. We have been comparing ourselves a lot to the international peers in our local markets. We want to play in the top 5 league. We want to outperform our local competitors, which are the top 5 there. And we do think that we can increase our future target combined ratio level to a lower than 95% ratio going forward. So this should give us also further earnings potential in the future. On the high diversification side. As I already said, we have a very strong and successful motor play in all our markets. 70% of our non-life book is motor. And we have already started to work on non-motor, of course, but there's still significant room that we can go forward. We see that until 2025, we can add roughly EUR 900 million in terms of non-motor premiums and that we will be focusing on SME, but we might even be going up a little bit further meeting jointly with Edgar who's coming from the top side in those markets that we're covering really the full market, which today, oftentimes, we are not yet. So this will actually help us to reduce the dependence on motor and actually also have most -- in most of these markets a more attractive profitability than even motor today. Secondly, we are improving our life portfolio. We do want to scale up our life protection business. We've already done so very successfully actually in WARTA, turned around from a very much savings-focused business to a very much a protection-focused business, and we can do so more in the other markets as well, and we'll continue to grow as well in Poland very specifically. At the same time, we do see the opportunity to derisk as well our life and savings -- life savings book that we have. And with the overall evolution, therefore, reduce as well the life share over significantly growing much, much more through the risk life business, and you see the numbers that it can reach alone with a risk life business, something like EUR 130 million premiums. The third pillar, which is nascent, but which we do see has become more and more relevant, especially in the emerging markets that we are working in is actually the health business. We have an emerging business in Turkey there, have started to work in Turkey with a specialized player as a partner, Bupa Acibadem, which you probably know. And we are interested in continuing to build that presence in the non-life type health business because it's a sizable market. It's a growing market. It's very relevant for our clients as well as for our distribution partners to which we have huge access, and it provides us well-attractive margins in most of our countries. And that's why we're also piloting jointly with Bupa in Mexico as well in Poland to enhance our footprint in this sphere. In terms of digital transformation, what I would like to talk to you about is that we already have a very strong starting base, which we can actually leverage also into other markets. The best practice lab that Torsten's actually built up is something that is working very nicely. And just to give you some examples, when you look at digitizing core skills, they -- I mean, for example, the pricing ecosystem, WARTA has built a very successful engine that actually allows given the simplicity of the quoting mechanism, where you only need 2 data points from the clients or from the broker to be put in and keep an extremely sophisticated tariff that we can increase the number of quotes that we get and therefore, the new business that we're actually getting in a good way. That has actually also helped us in terms of the data pricing ecosystem that we have to increase our technical margin on an annual basis in that -- in WARTA by roughly EUR 10 million. So it's really significant what we can do there. On the core processes side, I'd like to mention one example where we have more, of course, in our markets. For Mexico, where you see that we have been working for the last years on the claims ecosystem. And this does not only bring improvements in terms of efficiency of the processes, it also especially brings improvements on the customer satisfaction side. So the Net Promoter Score has increased by over 21 percentage points, which is quite remarkable through the activities that we have put in place and that we're continuously working on them. And the third part, which is also extremely important to me and to my teams is we are seeing that there's more and more opportunities around partnerships. Partnerships that are becoming more and more digital, of course. And the last ones where I'm quite happy about that we will be starting next year with BancoEstado in Chile, the largest bank in Chile that has roughly 14 million clients overall in a population of 18 million, out of which 10 million actually digital. And we're expecting that we can well reach the EUR 100 million premium through that partnership relatively fast at latest by 2025. So this is an endeavor that we will not only do in one or the other markets, we are working on all of our markets to increase our reach also on the digital side through partnerships. I said we want to continue to grow inorganically. In most of our markets, we can actually reach our top 5 position either because we already have achieved it or we can get there even organically. But in some, especially in Brazil and Mexico, we also are looking very specifically for adding further scale through M&A or through larger partnerships that we can do. But I want to give you some comfort. We're not just looking for any kind of deal at any kind of cost or price, we want to stay disciplined. And therefore, it needs to be in our growth regions, needs to help us strategically in the non-life sphere to become more diversified, to become stronger. And of course, it needs to fulfill the financial criteria that the group has said. As I said, we will continue to focus very much on Latin America. There's still lots of room that we can grow and want to capture going forward as well in Europe, even though there we are already at a very good position overall at this stage. So overall, what can you expect from HINexT 2025? On the one hand, for -- we will reach a target, an ambition for 2025, an ROE of above 10%. Until 2022, we can already expect a return on equity of 8% -- above 8%, a combined ratio, which will be below 95% and also continue to grow our non-life premium book by roughly above 8% going forward. So with that, I told you the ambition, I told you about our presence that we want to have in terms of scale in our core markets. With that, we will be working on organic moves as well as inorganic moves to foster profitable growth but as well build a more balanced portfolio than we already have today. Thank you very much for your attention. I'm happy to take any questions.

All right. So who has a question for Wilm? Dominic.

Two questions, if that's okay. The first was I wonder if you could expand a little bit on what derisking in the life portfolio means. Is this credit? Is this rate? Is this actions to sort of renegotiate the contracts? And then just on the M&A philosophy and approach. Page 81 is very helpful in terms of thinking about assessment criteria. What was the central cash balance, maybe this is a wider timing question? Once the central cash balance gets to that dividend cover target, does that change the way that you think about capacity for M&A, whether you might move up the scale in terms of size of deals that you might consider?

Thanks, Dominic, for those questions. On the life side, what we're actually working on is a number of topics. One, as I said, moving more from the savings side towards more the protection part which is already part of changing the portfolio and therefore, derisking. The second part is in the savings portfolio itself. We are moving more and more towards capital-light products, hybrid products that you can see. This is especially relevant for our Italian entity, of course, where we have the largest book. And we are on top, of course, at a situation already where we have close to 0% guarantees actually in our Italian book overall. So part of that is those 3 levers that we're working on. And we, of course, also considering and viewing our options of accelerating part of reducing the share of the savings book that we have. This is also in process and will be moving also relatively rapidly. So these are the number of very concrete actions that we actually have in place. With regards to the cash balance, I don't know if you want to answer that, but I think we have overall a good leeway to actually work on M&A, and that's actually also part of the attractiveness of the mandate that the group has given us for HDI International overall, but I'll let Torsten and Jan answer that maybe.

We were wondering about your question was you were asking after the deal size, which is probable or maybe you could repeat your question so that we can answer the right one.

Apologies, it wasn't clear. What I meant was earlier in the presentation, you were talking about building the cash balance at center towards your target of 1.5x dividend.

Yes. That is correct.

Does that change the -- once you get there, does that make it easier to do M&A? Does that -- or to put it the other way, for the moment, does that mean that your ambition for M&A is some more capped? Was that relevant?

Well, to be honest, it's not really relevant for the M&A question as we have various ways to finance transactions. And I think most of you would be even happy if we could improve the liquidity of the stock by doing so, but therefore, we would really need a bigger one because a smaller one we can do like this.

Again, there's nothing big in the pipeline yet when it comes to M&A. So nothing big in the pipeline. And maybe the question was indirect on whatever we have said to dividends will not change anything when it comes to M&A. So this measure will stay. Probably this was the direct question.

Roland Pfänder, please.

Two questions, please. Could you talk about synergies in these countries you're active in? So for example, product wise, is it possible to transfer know-how from one country to the other from one product. In the end, it's about scalability. So that would be an interesting topic from my point of view. And secondly -- that's the question actually.

It's a very good question, Roland. Thanks for that. So first of all, we do have -- and I stress that we do have a decentral setup and that is actually on purpose. So we want to reach minimum efficient scale in our local markets. And that's why we also want to have a top 5 position that allows us then to invest appropriately into capabilities in our local markets. That said, we do, of course, see that there are possibilities to leverage, especially skill across various countries. We have the best practice lab, which is working extremely well, where you have the experts in pricing, in claims, in products that are exchanging the successes, but as well the things that didn't work across this -- the experts across all of the markets. And that is actually helping a lot. So we're introducing -- for example, we've introduced in Mexico an UI driving pay per use motor tariff. And of course, we could build our experiences from the Italian markets and other markets where they actually looked into, okay, what worked, what didn't work beyond, of course, the reach that you normally do in looking to the outside world. Are we building, however, a global factory or similar things? Not at all. That is not our view. We do see significant differences market by market. It needs to be adapted to the local not only regulation, but also the local practices in the market in order to be as successful as possible.

And I think that was a very good question and a good comment because this is a philosophy of the business, right? If you -- if you go to wholesale business like asset management is, you can answer differently to the question. If you go to retail, as Wilm rightly said so, the last mile is critical. So cross-country synergies of whatever IT system of a factory, I mean, it looks very nice on the paper and our experience. We were not able to manage it. So I think -- and I know I have not seen it much because the last mile is so complicated. And at the end, the proof is there. We grow, we grow market share, we have the cost ratio. And then from -- if you see economy of scales, it's important to have a certain scale and then it's not clear who is the best cost ratio. So it would be too easy, say, the bigger you are and whatever you take in the retail. I talk about retail, the better the cost ratio is, but it's absolutely not the case. Because you have at certain point, you have the complexity costs which jumps in. And these are especially there when you have decentralized legislations, which change every quarter, for example, the tax environment, for example, how you can manage it centrally? So for me, this is retail absolutely necessary to be -- and you get a much better talent by the way. If you start to make cross synergies, and I can give you examples, when you see it's logical, for example, Czechoslovakia, for example, [indiscernible] their methodology is different and ours is different and so on. So looks very nice on the paper centralization of the retail in fact it doesn't work. This is our view.

Sorry, let me just add that one again to that. If you were to come, for example, to our operations locally and look at what we have been already building up in terms of talent and skill, we're happy to take the competition even on a broader level beyond the local market.

Okay. So we have a final question coming from Thomas Fossard.

Yes, a question for me. Actually, your equity growing in Poland and Turkey, which are high claims inflation market. How do you feel about the plan to overcome these challenges? And is pricing momentum sufficient to have profitable growth in those countries? And maybe more widely speaking, but Bernd, tell me if this is now the right place to talk about it. I mean claims inflation more generally for the group, I mean, Jan or I mean, Ulrich, can you say a word on that? And what if it's -- it goes beyond the short-term issue? So what would be the impact on the industry?

So of course, claims inflation is currently a topic in our markets. What we see is, especially on the motor side, that we have normalizing frequencies at varying levels. It depends really country by country. Some are still a bit lower and some are already pretty normal already, and inflation also depends. You have the extreme on Turkey where the inflation is already relatively high, has already been high before, but it has become higher during this year. So the description that you make is correct. What have you -- have we done in order to maneuver that? I mean, first of all, you have seen already that in our 9 months figures, we're still at a 94.3% combined ratio, which is better than last year. Why is that possible? We have started to react, of course, on the pricing side. This is short-tail business, especially MOD that is impacted by inflation. And so we have, of course, reacted with price increases at the appropriate level. It will take a little bit of time because you have the earned premium effect, of course. But nevertheless, we are very confident that we can maintain what I just said in terms of combined ratio on this front. At the same time, we're not only working on the pricing side, but we're also working, of course, on the claims side, taking the appropriate levers to counter or mitigate to the most way possible, the inflation, be it through fraud, be it through better steering, be it through working more on repairing versus replacing. So there are a number of initiatives country by country, which are currently put in place or already put in place since a couple of weeks.

And maybe for the group level of the question, yes, we are managing inflation. We have to manage it decentralized, like Wilm just have said. And on 3 parts. One is underwriting where the pricing needs to adapt to the inflation, which we see in claims. Second is reserving. Just keep in mind the figures you've seen as of today, we already have embedded inflation. And we have an inflation of above 2% embedded in the figures you've seen, and they're obviously in reserving inflation matters, and certainly, in asset management. And with regard to asset management, just want to make you aware that we have an inflation linker portfolio of EUR 5.5 billion in place. So we are a huge investor in inflation linkers in order to cope with shocks in place. So it's not the case that we believe that we can be better than the market inflation rates of the future. We simply believe it's a part of our risk management with regard to inflation because inflation really matters for the insurance industry, but you really would have to ask division by division and in the division line of business by line of business because we have learned that the inflation really differs and country by country.

And I should probably add as well because, Thomas, you have been asking about Turkey. Of course, we see this as well in the interest rates. They have also gone up in some of our markets already. And given that we have a relatively short-term portfolio in most of our markets, we see those effects positively mitigating claims inflation measures.

And maybe just on this, I would argue as well that the -- and Ulrich, for example, already said, we're very careful with the long-tail business, right? And so with a more short tail, you have percentage-wise, the easier -- basically, it is, say, to manage social inflation, basically. And then the question is not how much short tail long tail you have, but as well as the question is how much you have in special environment, geographies like U.S. where this is much stronger social inflation besides the normal inflation. So I think we are in both areas, be it geographically and as well long tail, underexposed in that area.

And can I ask specifically on Poland, if there are new issues emerging there? Because it seems to be that on your Q3 numbers, the combined ratio deteriorated quite significantly, or is that short-term challenges? Or should we expect, I would say, yes, a higher combined ratio for a couple of quarters?

I would say the following. Of course, what we've seen at the beginning of the year already that there is this normalizing of frequency and starting inflation. What we have seen as well that the market at the beginning of the year was a bit reluctant to increase prices. So we have been a bit careful in our approaches because we want to protect our client franchise. But at the same time, we have started to move on the average premium side to move in the right direction. And I think overall, we have an overall good evolution. What you see in the 9 months numbers, the deterioration is on a level that was extremely profitable in 2020, where we had windfall profits. Of course, on the frequency side, which is normalizing. So 93.9% is still a very strong result. And also, you can be confident -- or we are confident given the reserve levels that we have also in Poland that we can manage quite well the future evolution. And we see as well that the market is starting to adjust in the last weeks, and we're confident that, that will continue into 2022.

All right. So now going back to Germany. Christopher, telling you something about his new task on Retail Germany.

Good morning, and a warm hello from myself here in Frankfurt as well as all watching online. I'm very happy to present for the very first time, the results and the strategy for HDI in Germany and look forward to your question afterwards. As Torsten mentioned earlier, I joined the Board and the team about 15 months ago. So I'm new to the team, and I'm very happy to be part of the team because this team is truly a team. And the 15 months are of importance if we look at this slide that Torsten presented earlier because the bulk of the credit for the results. On the left side, go to my teammate, Jan Wicke, who was in charge for HDI in Germany, as you know, for the last 5 years. Jan was the 1 who promised the EUR 240 million EBIT, and we will deliver on this promise. This year, we will certainly end up at an EBIT $250 million or above. And the same is true for the strengthening of our capital position in life. If you look at the Solvency II ratio, it will be indeed go up significantly given that the capital markets are where they are, this is truly a very strong result. Going forward, the key issue and the key headline for our strategy is focus. We want to focus our business model. We want to focus our operating model, and I will explain in a couple of minutes what that means. We are convinced that in the end, we will be able to generate an ROE of 10% and more if we take the Ampega results into account that are generated by the book of business Ampega is managing for us. We feel that this is the right way to build the business and to build the figures. If I say we, let's look at the team, and this team has also changed significantly over the last years. Going -- starting with Herbert Rogenhofer. Herbert Rogenhofer is the guy who is now in charge of our German PC book. He was a true -- he was an entrepreneur in IT. He built up his own company, which he's sold a couple of years ago, and he is a true entrepreneur in mindset and spirit, and he brings great energy to the team. In his leisure time, he has a caravan, he likes to travel the world and brings all the impressions and the learnings back to Hannover and to Cologne where he's working. Next is Sven Lixenfeld. He joined us in August this year, took over the responsibility for Life. And he has a very special set of skills. He brings together the skills of being a real life expert as well as an IT expert. He worked for a long time for a consultancy he had a look over the last 10 years and almost each and every life insurance company in Germany. And at the same time, he was himself in charge of life operations in Germany. So a very broad set of skills. The only thing that Sven does not bring to the table and those who are familiar with Germany know what I mean, he's living in Dusseldorf and he's running a business in Cologne. And the last one on the team is Stefanie Schlick. She will join us at the beginning of next year. She joins us from Generali, where she was in charge for a whole different range of different very much customer-focused operations. She worked for operations as well as for sales. She was in charge for the direct business at Generali as well as for the broker business over the last 4 years. Again, a very interesting profile that adds specific skills to our team. Stefanie is the mother of 2, and I truly admire the way she managed and balances the task that she has in her business life as well, of course, as the family does. If you step back and look at the team, what do we gain? We gained significant more expertise in IT. So on the way to become something like an insurtech, which we all have to be, I think we made good progress. And at the same time, sales at HDI German is female. Taking stock again and looking back at what has been reached over the last years. You see again here the EUR 250 million, we will target that and shoot at this year. If we take this a little bit further down and look more closely to the results and at the details, you see on the right side, the clear strengths that we can build the strategy on. We grew significantly in the SME business over the recent years, significantly above market. It's clearly a core strength. It's clearly the core of our brand. We have a market-leading position in bancassurance and in both in SME as well as in bancassurance, we are in a position to shape the markets, and this is what we intend to do over the next years. And again, we do this on a very solid solvency position that we have reached over the recent years. Michael, from London, he asked a couple of minutes ago a couple of hours ago, I have to say, how can you improve the solvency position the way you did this. We did this and Jan did this and ran this by derisking -- significant derisking, actuarial derisking. We did a lot of asset liability management and improvement, closing the duration gap. And at the same time, we also looked at the risk modeling. I think these are 3 important issues that in the end, contributed to the solid position we are on. Going forward, we need to continue the path of derisking life. Going forward, we need to close the cost gap that we still have, and this is an issue that we have in Germany. We are not the cost leaders, my colleagues already are, and we need to focus the business model in doing so. What do I mean by that? If we look at our competitive position in Germany, you can say that HDI Germany is somehow caught in the middle or somehow stuck in the middle. We offer a whole lot broad range of different products, basically to all customer targets -- target customers and basically through all the different channels. And given the size we are in, we just do not have and cannot build the cost position we need to have to be successful in this specific position we are on. And if you look at the competitors, you clearly can see some who have just significant size and scale and so can build up the broad range that we intend to offer. And then the other side, we have a couple of competitors that focus and are successful in doing so. And looking at the position we are in and looking at the markets we are operating in, we feel it's time to focus -- to further focus the business model and to focus on the core strength that we really have. Now what does that mean in terms of our new strategy, which we call GO25 stronger together. Basically, it's built on 2 different pillars. We want to strengthen our strength. And we want to secure the profitability of our book. Strengthen the strength is we will put the money and we will invest in those areas we are particularly strong, and we can build a competitive edge in. That is building on our position of the SME insurance and being the best digital bancassurer. At the same time, we want to safeguard the profitability we have specifically in our retail books, making sure that we do not lose this profitability and that we do not lose these kind of books. So we want to become more competitive in retail P&C. And we want to turn the life insurance more profitable. We want to shift. We want to shift the focus in life insurance towards solvency and profitability. All of that, in the end, will lead to an ROE of 10%. That's the business model. And if we look, and that's the very heart of what we're doing. We look at our operating model. Of course, we need to trim the operating model to be able to make it become the engine of driving the development of the businesses out in the market. Now let me take this a little bit more into detail, starting with the SME position. You can see here that we have the ambition to grow our book even stronger than in the past, and we think we are in a position to grow the SME book to a size of EUR 800 million until the year of 2025. When we look and compare this number and compare it to what has been achieved already in the past, we have to take into account that between HDI Global and HDI Germany, we shifted the demarcation line between the business that we do until the end of last year, we were only focusing on businesses up to EUR 5 million in turnover. And as of January of this year, we now focus on businesses up to a business volume of EUR 20 million. We do so because Edgar and myself, we are convinced that we are better able to serve these kind of clients. They are more retail shaped than really industrial shaped. We feel that the access to these clients is closer to what we can do through the broker network that we have in Germany. And at the same time, I think it is a clear sign of the way we cooperate in this Board together because we think this is the best way going forward. If you look at the right side, I think we have everything it really takes to tackle this market. We have a strong position in the broker business. At the same time, we have the digital products and the digital capabilities to build new ways and to really build on the new access that you need to have for these kind of clients we are facing here. Bancassurance. Bancassurance, we want to grow the book over the next years with a CAGR of 2%. Now you might say this is not really too ambitious. It is indeed ambitious because this figure takes into account that we will, of course, see a turnover hit due to the gap in provisions for the PPI business, which will become effective by the mid of next year. This will cost us something like EUR 150 million to EUR 200 million in turnover, and is clearly part of the book and of the planning that we see here. Again, we feel that we have a competitive edge in bancassurance. Whenever any bank in Germany asks an insurance partner to become a partner, we are always part of the league. So we really play champions league when it comes to making business specifically life business through banking partners. And you can see here from the billboard that with TARGOBANK, with Postbank and with the Sparkasse organization, we really have a very broad franchise of different banks we do business with. And what we want to do going forward, we want to better leverage the customer base that these banks really offer by combining and by bringing to the table new digital ways of attracting customers by building new applications as well as by playing the social net differently and better than we have done in the past. Safeguarding the profitability by safeguarding our property casualty book here. You can see our CAGR is 2%. It is not really too ambitious. Again, we want to keep the portfolio we want to build on the profitability. We have very strong claims results. If we look at the property casualty book, specifically in the retail area. What we need to do is really to address our cost position. This is the key lever for us to a better competitive edge, and this will be clear our focus for the next years. I'm happy to take this further in the Q&A, if you're further interested in, which brings me to my fourth main part of our strategy, which is life and which is clearly on your minds, which I learned yesterday evening where we discussed this issue of life already extensively. Again, you can see here the past where we built a solid base, specifically for the life business. Going forward, we would -- we want to accelerate the process of derisking by really focusing on less than 10 products that we have in our portfolio. Today, we have something like 35 to 40 different products, and we want to limit the offering that we have in the life business to less than 10 capital-light products, basically being the focus of biometrics, unit-linked and a little bit of capital-light pension schemes, which adds up to the SME strategy that we have. In the end, this means that we really turned away from the standard capital-intensive, guarantee-intensive products of the past. And this will, of course, has an impact on our top line, but it will -- and that you see on the right side, significantly improve the ROE that we are shooting at. The second important point I would like to talk about is the one the very last on this slide. You can only do this, of course, if you trim your business model, if you really address your cost base only if you have a slim business model and then adequate cost base. Of course, you're not depending on writing any business that you do in the end, not want to write. But talking about the business model is the one thing, talking about how do we honor to operate this and how do we want to run this. Here, we work very much by the idea of the German Mittelstand. I think it is a term that even the colleagues in the London markets are well aware of the German Mittelstand in this -- with this trades of being close to the customer, being top-notch in terms of technology, being agile, being flexible and reacting to market developments and so forth. And we want to learn from this kind. We want to be close to the Mittelstand and to be something like a Mittelstand by heart. Knowing our customers, serving our customers well, have a slim business model, reduce the cost, accelerate our product development by being more agile and by becoming more digital. There's one thing on this slide that will keep us busy for the next 12 months, and that is an agile transformation. We will transfer HDI Germany in an agile way. So we are just in the middle of starting release trends and starting release trends, of course, this will keep us busy, but we are sure that this is again very close to Mittelstand and very close to the insurtech idea that all the new colleagues bring to the table that are now part of our team. And the other important issue of the Mittelstand by for heart is, of course, being top-notch in terms of technology, being top-notch in terms of digitalization. And here, again, 3 levers are of utmost importance, the very one at the base. And here again, lot of credits to Jan Wicke for a simplification of the IT structures over the recent years. 233 systems are no longer with us because they were shut down and about 70% of the path that we set forward in shutting down IT systems has already been successfully managed. We are this year in the middle of migrating a significant part of the Postbank book to our common platform we have in IT, which is, again, a major step going forward. There is no digitalization without really making the homework. This is doing the homework. The second part, I think we are already in. And if we look specifically at banking, we are already a platform partner for many of our banking partners. We want to extend that when we are building that. And what is really one of the most moving moments for myself is always when I go out and talk to insurtechs, like Thinksurance or Finanzchef24, or to CHECK24 or to Neodigital. And when they tell me, Christopher, you have people, you have talent in your company, you have the things really to run this successfully. I think we are there and we can really build the business from there. And finally, of course, data is key. The skills to be strong in data analytics is key. And here again, just one example. We recently won the competition is called 1 Porsche Data Cup. Porsche asked they will put forward a new, they will issue a new Macan 23, and they asked insurtechs, inside, outside teams for ideas of what to do with the data that this Macan will produce. There were 34 -- there were 35 different teams. HDI Germany, our data analysts on testing, and we are now working with Porsche on a new business model for a new car insurance. And I think this clearly demonstrates what we are able to do, so we have the skills, and we clearly have the talent to go forward. If we bring this together for the next year and the next years, you can see here the growth path. Yes, in life, we do not plan significant growth, but this only is the consequence of the derisking and the ROE focus, and this is something you then have to live with. We want to grow significantly in P&C, which basically comes from the SME business. This as a combined ratio in the short term at 96%, in the long term, of course, at a 95%, which needs to be our benchmark. And the return on equity will be between 7.5% and 8% next year taking again the Ampega results into account. In the end, our ambition until 2025 is 10%, which is, in the end, the large target for GO25. We want to secure this by really building on the profitability we have in our books, but we want to grow where we are. We want to strengthen the strength, that's SME and that's bancassurance. Thank you very much. I'm happy to take your questions.

All right. So Roland, you have a question for Christopher.

Yes, actually, 3. Please touch on the cost structures you mentioned. So where are these remaining pockets of above-average costs that you need to reduce? Then looking at the German banking system, bank branches are reduced every day. So is this a problem for your bancassurance? Maybe you could touch on car insurance in Germany. I think also your premiums are going down. So what's your take on that one?

Yes. Thank you very much, all 3 very interesting questions. And as you might imagine, questions we deal very regularly on a day-to-day basis with. There is still -- there is -- there are pockets for costs, certainly. If we look at our organization, if we look at our management structure, there is additional functions that we can take out. We want to consolidate certain control functions. And if it comes to productivity in the operative units, there's also some way to go. And we already addressed this by really comprehensive programs both in life as well as in PC. If we look at the cost base, the cost base this year is something like EUR 780 million. We want to shrink that to EUR 650 million. So we have EUR 130 million to go. And about 80% of this way is already covered by specific measures among those lines. Within our Board of Management, we have assigned clear responsibility. Each Board member has a responsibility for a certain cost issue going across the different parts. So this is something we really want to get this down. We need to get this done and there is plenty happening. The banking system, that's indeed, of course, an issue. We see this in all our partnerships. We are large with TARGO. We are significant with the Sparkasse and with Postbank. And of course, we see the reduction of branches there, and we see how the business is moving into the web. That's exactly why we want to become a digital bancassurance player. We want to really build the capabilities to serve these business models, which means we need to have even better application processes, which we can then build into the platforms of the banks. We want to work more comprehensively with the data. This is certainly something neither the banks nor ourselves really do and can really build upon. And we need to further improve our IT interface with the APIs to really be able to build our things into the processes. We have some good examples. If you look at [ work center ] last year, [ work center ] was something that was issued by [indiscernible] in Hamburg, where they not only built a fully electronic application process, but also developed the skills of really picking up in the social web, the client and then taking it through the net -- taking the client through the web to the beginning point of the application process and then processing the whole project -- the whole product down. This is the way future and we really built -- build -- and we further need to build the capabilities. And again, with Stefanie Schlick coming from Cosmos, she certainly brings additional skills to the table, which will help us driving this forward. And we work here together as a team on these things, even if she's in charge of broker or our tight agents, she will, of course, contribute to the process overall. The car is -- I mean, car is -- car in the end is a question of aggregators. Car is an aggregator business. So if you have a slim and a good product and if you have a good cost base and you are performing well in the aggregators, then in the end, you can build a book or then you can defend the book. So we see a clear shift of the access point of the clients, who their tight agents or the broker net all the way to business that in the end is driving by comparisons, yes. If you look at the broker business today, there's comparisons. It's not really a sale -- car is not sold anymore. It's not really sold more. It's really basically a question of how do you perform in terms of comparison. And we just issued a new product for this new round. And we're doing fantastically. We have -- for the time being, we have new business, which is fivefold to what we had last year, which is very, very strong, and we built this from a customer point of view. We partnered up with Vocatus, a behavioral economics company, and we did a joint project with them. We developed this new product together based on BE principles, and it's performing well. And I think this is the way you really can -- need to address this. You need to have the right access which in the end gives you then the business and you really need to constantly develop the product from a customer point of view. Currently, we are quite good on track in this regard.

Okay. Other questions for Christopher? One more question, checking online. Any questions outside this room. No. Okay. So then obviously, your presentation was comprehensive. Thank you. And Torsten Leue will conclude with his final remarks.

So I would say at least we had a very good timing because now it's 12:00. I hope you like it. We went 3 hours. It's quite difficult for you virtually to follow 3 hours in front of the screen. Hopefully, it came across what we want to deliver to you or to send you as a message. So first is 10%. And the 105 and 115 is our next year outlook. But more important for me is we're all here sitting in the room or you at home or in your office in front of the screen to see about the future. And to see the future, the best thing is to predict it from the past performance. And we would like to bring you that we have performed because it's not us saying it, but we delivered what you promised. We give you as well the expectation that the dividend is probably within your expectation range we told you today. But as well, we told you we will change our dividend policy at the next Capital Market Day second half of next year. And changes for sure should -- not for the negative. And we said as well, 10%. This is a magic number for us, double-digit return on equity and a 25% ambition. So what we would just to bring to the 3 hours is across, we found a really good team here as energy is a team -- it's a diverse team, even though we look all male, but the source are diverse. These are ambitious things we transported today to you. Always with a kind of conservative approach that we have in the backyard, you see the resiliency. But at the end, we would like to win you the trust at least that you have a very energized team who is fun to perform or better to outperform. So with the 10%, I would like to thank you much in front of your screen. Thank very much for here being present personally with us. And here's the disadvantage not to join us for lunch, but have your lunch wherever you want to be. Thank you very much, and see you, hopefully, everybody present here or somewhere we will see next on our Capital Market Day. Thank you very much for joining us for 3 hours. Thank you, and thank you here as well. Thank you.