Ladies and gentlemen, welcome to the Munich Re half-year financial report as at 30th June 2026. I'm Sergen, the Chorus Call operator.

I would like to remind you that all participants will be in a listen-only mode and the conference being recorded. The presentation will be followed by a Q&A session.

You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero.

The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Becker-Hussong, Head of Investor and Rating Agency Relations.

Please go ahead.

Thank you very much and good morning to everyone. Welcome to Munich Re's Q2 2026 earnings call to all analysts and investors joining us today.

We indeed appreciate you attending our presentation as we are aware that some other insurance companies released results today. I have the pleasure to be joined by our CEO, Christoph Jurecka, and our CFO, Andrew Buchanan, today.

Both gentlemen will kick it off with some upfront remarks. Afterwards, there will be plenty of time for Q&A.

Christoph, the floor is yours.

Thank you very much, Christian. A big pleasure to see you all today virtually, and to present excellent results today.

Let's start immediately on my page four. As you can see, we deliver on our promises.

Munich Re is firmly on track to achieve its full-year targets as it has consistently done in recent years. With a net result of EUR 3.9 billion in the first half of the year, we have already achieved more than 60% of our full-year net income guidance.

To be fair, we benefited from low major losses and a strong equity market performance. However, these results are at the same time reflecting the continued strength of the underlying performance across our business segments, which I will discuss in more detail later.

This performance translates into a return on equity of 23%, comfortably above our Ambition 2030 target of more than 18%. After only six months into the new financial ambition, I'm fully confident that we will deliver on our medium-term targets, despite the current headwinds in P&C reinsurance.

My confidence is underpinned by the strength of our businesses, which are largely insulated from the P&C reinsurance cycle. Slide five of our deck illustrates that the growth in GSI, in Life Re, and in ERGO more than offsets the revenue decline in P&C Re on a currency adjusted basis.

We will continue to expand their earnings contribution, enhancing the diversification of our earnings profile and further strengthening the resilience of our financial performance over time. GSI is actively shaping its portfolio to capture opportunities in attractive specialty insurance markets, while Life Re and ERGO are delivering consistent earnings growth for quite some time now.

While P&C reinsurance contributed around 50% of our half-year earnings, the strong performance of these other businesses gives us greater flexibility to manage the reinsurance cycle more strictly. We can afford to walk away from business where pricing does not meet our profitability requirements.

Disciplined underwriting remains essential to maintaining the quality of our portfolio and navigating a temporarily more challenging market environment. Across the group, management incentives are not driven by top-line targets.

In many cases, foregoing business is preferable to writing business at inadequate terms, while we, of course, value long-term client relationships. Accordingly, our insurance revenue guidance should be understood as a directional ambition rather than a hard target.

This brings me to the July renewals on slide six. Our discipline was again evident in the July renewals, where we managed the portfolio consistently to optimize risk-adjusted returns.

We withdrew from business with inadequate profitability, particularly in the XL segment, partly offset by new business opportunities in proportional and non-proportional business. Overall volume declined by around 9%, however, largely driven by the overall price decrease of 5.5% and a further material reduction in U.S.

casualty. The reported price change includes a negative business mix effect of around one percentage point due to an increased share of proportional business.

In essence, in July, we saw no acceleration in rate softening compared to the April renewals. Pricing in XL business moderated by the same amount, while slightly higher declines in proportional business reflected the higher starting profitability in those markets renewing in July.

In casualty business specifically, we have not accepted a meaningful increase in ceding commissions, but are still concerned about loss cost trends being greater than rate increases in the primary insurance market. Importantly, market discipline was largely maintained, with structures and wordings holding firm.

Overall, the market environment remains still quite attractive and continues to offer healthy margins for the risks we assume. Maintaining this discipline requires the flexibility to redeploy capacity swiftly across geographies and perils.

Munich Re has a clear competitive advantage in this respect, underpinned by its strong capitalization, the global footprint, and deep client relationships. The bubble chart on slide seven illustrates how consistently we manage the portfolio.

We are prepared to reduce or exit business where pricing does not adequately reflect the underlying risks, but also maintain business that comes from a very good level and is still attractive. At the same time, we continue to identify attractive opportunities to deploy capacity and grow, including in Latin America and the U.S..

Less exposed to the cycle is our Global Specialty Insurance business, which is shown on slide eight. We established GSI to bring Munich Re's growing specialty primary insurance businesses under a single integrated management structure while leveraging the group's risk expertise, capital strength, and brand.

The business grew by around EUR 800 million annually through 2024, and adjusted for currency effects, would have continued to grow in 2025. By combining a broad range of special insurance businesses, geographies, distribution channels, and underwriting cycles, GSI can flexibly allocate capital to the most attractive profit pools.

Recent product extensions are U.S. real estate, professional liability, as well as surety in Europe.

In terms of profitability, GSI has consistently delivered very strong combined ratios, fluctuating moderately around 90%. Looking forward, the segment is well on track to generate robust and gradually increasing earnings over time and to achieve both this year's targets and the medium-term objectives of Ambition 2030.

Moving to life reinsurance on page nine, which has performed strongly in recent years, and this positive momentum continues. We remain highly successful in generating new business that will translate into earnings over time.

In the first half of the year, we concluded a longevity transaction covering EUR 4 billion of pension liabilities. More recently, we completed two large structured transactions in the United States, which will only be reflected in our numbers later this year.

Our substantial CSM stock provides a strong foundation for reliable earnings delivery. Supported by a well-diversified portfolio, we continue to capture attractive opportunities in transactional business and longevity.

At the same time, we remain disciplined. Our clearly defined risk appetite helps mitigate the risk of adverse surprises, as evidenced by aggregate experience that is tracking slightly better than expected.

The very strong performance of our FinRe business once more made a significant contribution to earnings. Together, these factors drove a total technical result of more than EUR 1 billion in the first half of the year, somewhat ahead of the pro rata full-year guidance and underpinning the targets of Ambition 2030.

Turning now to ERGO on page 10, which continues to deliver reliably against its ambitions and is well on track to achieve its targets once again. ERGO's digital-first approach and the systematic deployment of AI across the group are key drivers of further efficiency gains and scalability.

At the same time, ERGO is deepening customer engagement through its customer portal, a four-time German Brand Award winner, and the ERGO app, which ranks first among insurance apps and customer surveys. In addition, ERGO continues to invest in its global brand to strengthen international visibility.

In Germany, the focus remains on profitable growth, balancing top-line expansion with underwriting discipline. We see attractive growth opportunities in P&C, including fire, property, and motor, as well as in supplementary health and new life business.

This is supported by top-rated products and a high-performing sales organization. Together with disciplined underwriting and effective claims management, this underpins a strong technical profitability.

While Germany remains an important market for ERGO, the strategic focus is gradually shifting towards a higher international earnings contribution, where ERGO continues to deliver dynamic growth. Strong market positions in Polish motor and Greek property, as well as Belgian corporate health business, are driving profitable top-line expansion.

The integration of ERGO NEXT is on track, and we are convinced that its AI capabilities platform, combined with ERGO's underwriting excellence, will be a key catalyst for profitable business development. Let's turn to our investment portfolio on page 11, which continues to benefit from supportive capital market conditions.

We are reinvesting new money at 4.3%, providing further upside to the running yield. However, we are not relying on higher interests alone.

We have identified additional levers to enhance returns, including the gradual expansion of alternative investments and the active pursuit of opportunities across markets and currencies. This quarter, we also benefited from a strong performance of our private equity investments.

This brings me towards the end of my presentation with the Outlook 2026 on page 12. Based on strong half-year results, we're heading with tailwind into the hurricane season, being well on track to deliver another record result this year.

I'm even more so pleased that all businesses are contributing to this success. At our Q1 call in May, we announced that the revenue forecast is more challenging than what we thought when we originally said it.

With the information of the latest renewals, we decided to lower our revenue guidance in reinsurance by EUR 2 billion to now EUR 38 billion. I said in the beginning, for us, this is a directional goal rather than a hard target.

Related to that, let me conclude with a few remarks on our Ambition 2030 on page 13. No doubt, we are seeing the effects of the reinsurance cycle on growth and margins in our P&C reinsurance business.

This is, to some extent, amplified by the benign major loss experienced, a double-edged sword that supports current earnings but doesn't help in price negotiations. Such cyclical pressure is not new to us, and we have navigated similar phases successfully before.

It is precisely why we have already considered a certain slowdown of the technical performance in P&C reinsurance in the earlier years of our financial planning period until 2030. However, this time around, we are even better placed than in previous cycles.

Our strong balance sheet, higher investment income, and the steadily growing earnings contribution from businesses that are largely insulated from the P&C cycle enable us to navigate the softer market environment from a position of strength. This gives us the flexibility to walk away from business where pricing does not meet our profitability requirements while valuing long-term client relationships.

Anyway, over the medium-term, we see a compelling case for P&C reinsurance supply and demand becoming more evenly balanced again. Finally, our strong solvency position of more than 300% provides substantial flexibility in managing capital.

We remain committed to returning excess capital to shareholders through growing dividends and share buybacks. Together, these strengths underpin our ambition to deliver a return on equity of more than 18% and average annual earnings per share growth of more than 8%.

In summary, the targets of our Ambition 2030, of course, remain fully intact. With that, I hand it over to Andrew now who will guide you through the Q2 figures in more detail.

Thanks very much, Christoph, and good morning to all of you from me as well. A quick logistical comment up front.

For my remarks, I will not refer to any further specific slides in the pack, which you all have, of course. I'm just going to verbally expand on the financial performance of the quarter and the half-year.

I start by repeating something that Christoph said earlier. Our diversified business model underpins sustainable earnings over time.

In the short term, P&C reinsurance once again benefited from a benign major loss environment, putting us on a strong course towards our earnings target for this year. In an environment where the reinsurance cycle is showing signs of softening and underlying earnings in P&C Re are beginning to reflect the terms achieved in recent renewals, the profitability of this segment remains at an adequate level.

The benefits of diversification are becoming increasingly evident as strong contributions from our other segments enhance the resilience of the group's operating performance. In addition, as you know, a strong investment result in this quarter complemented the sustained strength of our technical results.

All in all, this resulted in a strong second quarter net profit of EUR 2.2 billion, which you will have seen a couple of weeks ago in our pre-announcement. Together with the very pleasing Q1 result, Munich Re remains firmly on track to achieve its full-year target.

Against that backdrop, let's take a closer look at the key Q2 earnings drivers, starting with the investment result. The return on investment of 5.5% benefited from favorable capital market conditions with strong contributions from both public and private equity investments.

The running yield of 4% was supported by higher interest rates, I should also mention dividend seasonality and also the catch-up effect from our inflation-linked bonds, which I also talked about in this call back in Q1. The reinvestment yield remained, or in fact increased, to a very good level of 4.3%, which will provide continued support for the running yield through the rest of the year.

With a return on investment of 4.2% for the first six months of the year, we are comfortably within our full-year guidance of greater than 3.5% ROI. Excuse me, I turn to the business field, starting with reinsurance.

The life and health reinsurance total technical result was EUR 528 million in the quarter, so above the pro rata ambition that we would need to hit our annual target. The release of the CSM and the risk adjustment was in line with expectations, while mortality experience was slightly positive.

The result from insurance related financial instruments developed very favorably, supported by the large transactions that our colleagues completed in the second half of last year. It's very pleasing also that the stock of life CSM continues to grow, having now reached EUR 16 billion, driven by solid new business generation, with some help from positive currency effects, providing a strong foundation for sustainably high technical results in the coming quarters and even years.

Being ahead of the pro rata total technical result guidance after the first half year means we are well on track to achieve our life and health targets as well. In P&C reinsurance, we posted a strong Q2 result as well.

You will have seen the combined ratio of 68.9%, once again benefiting from very low major losses. Reserve releases amounted to the usual and expected six percentage points in the combined ratio.

In our Q1 earnings call, we had already mentioned the upwards pressure on the normalized combined ratio, and you can see that in Q2, the ratio increased to around 82%. This firstly reflects the gradual earn in of recent renewals, which also led to business mix effects from a higher share of casualty proportional business and a lower share of property non-proportional business.

What we did not know at Q1 was that the increase would be accelerated also by the writing of a large structured transaction, which has led the basic loss ratio to shift upwards somewhat structurally as well. You will have heard me say in the past that if we find business that has a good balance of risk and return, we will not hesitate to write it, even if it drives the combined ratio higher.

I should also mention that the normalized combined ratio in Q2 has been adjusted for some one-off effects that are either temporary or relating to past periods, which I do not believe represents the underlying business performance. That in total accounted for approximately one percentage point in Q2.

Looking ahead, we would expect the 82% to continue trending upwards over the remainder of the year, albeit at a more gradual pace as the renewal impact now also for July continues to earn in and also as the large transaction I referred to a moment ago grows in volume. At this point, I would also like to comment on top-line.

Christoph already mentioned in his remarks that we now expect insurance revenue in the reinsurance business field to be EUR 2 billion lower than the original guidance of EUR 40 billion. I mention it at this point in my remarks because this reduction is largely attributable to P&C reinsurance, where in the first half of the year, revenue declined by EUR 1.4 billion versus the prior year period.

Roughly 1/3 of the decrease was driven by currency movements and NDIC-related accounting effects. Above all, however, it is the result of disciplined underwriting decisions which were taken to protect the profitability and quality of the portfolio.

The new revenue forecast does still imply a stronger second half year compared to the first half, including the continued earn in of the new structured transaction in P&C Re that I mentioned a few minutes ago. Importantly, this adjustment to the top-line guidance does not affect our earnings outlook for the year.

All in all, with a combined ratio for P&C Re of 67.9% after six months, we are heading with tailwind into the hurricane season. I now conclude the reinsurance part of my remarks with Global Specialty Insurance, which delivered a pleasing result in Q2.

On a reported basis, GSI revenue declined by around 3% compared with the first half of 2025. However, adjusted for currency and NDIC effects, organic growth was positive, and was closer to the lower end of the range of 5%-9% that we had talked about for the Ambition 2030 program.

The combined ratio of 88.9% was largely in line with expectations, and with a first half year combined ratio of 86.3%, we are well on track to meet our full-year guidance in this segment as well. Coming now to the primary insurance business field of the group, ERGO delivered a strong net result of EUR 321 million in the quarter, so far above the pro rata run-rate and with a significant contribution this time from the strong investment result.

ERGO Germany contributed EUR 235 million out of the EUR 321 million that I just mentioned. In German P&C, we achieved good technical profitability and took a more prudent approach to reserving in order to continue building balance sheet strength.

I would say also that it was the P&C segment in particular that benefited from the strong performance of private equity investment. Life & Health in Germany developed in line with expectations, as did the CSM release rate of about 2% and the result from PAA business.

The CSM stock remained at the year-end 2025 level, reflecting positive operating changes and growth in the life new book. The ERGO International business achieved a strong net result of EUR 86 million.

International Life & Health was in line with expectations, showing a stable high CSM release and new contracts added, driven by Spain and by Belgium Health. In the international P&C business, the technical profitability and combined ratio were overall within the range of expectations, with especially pleasing performance in major markets like Poland and Spain.

ERGO NEXT is progressing well in business development and integration. A remark on the group's economic solvency position.

It remains very strong. The ratio under Solvency II increased to 304% in Q2, driven by the very pleasing operating performance I have just described, our economic earnings were even significantly higher than the IFRS earnings in the quarter.

With this, I am at the end of my opening remarks. Christoph and I look forward to answering your questions.

First, I hand back to Christian.

Thank you very much, gentlemen. We are now very much looking forward to your participation, the analysts, in this discussion.

I would like to ask you not to ask more than two questions per person. If you have additional questions, just please join the queue again.

With that, we can go ahead. Thank you.

Ladies and gentlemen, we'll now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone.

You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two.

Anyone with a question may press star and one at this time. We have the first question coming from Shanti Kang from Bank of America.

Please go ahead.

Hi. Yeah.

Thanks for taking my question. It was really on the reinsurance revenue guide.

I've heard your comments now that this is more of a directional ambition. For that EUR 38 billion for the full-year, that sort of implies an acceleration in the second half for revenue.

I'm just curious to understand what would drive that sequential improvement in the second half of the year. Would that be from the Life & Health transactions you mentioned, perhaps GSI or structured one-off?

I guess I'm trying to work backwards from you actually setting the new guide at the EUR 62 billion or EUR 38 billion. You clearly set that with some purpose, and I'm curious what the execution risk is to that, I guess.

Thank you.

Good morning, Shanti. It's Andrew here.

I'll take your first question today. I think you've gone quite some way towards answering your own question already.

When looking at this guidance, we did carefully look at what was in the pipeline, as we always said we would do. Indeed, on the Life & Health side, I'm cautiously optimistic.

Christoph mentioned that we'd written a couple of things already that we are pretty sure will come into the books in the second half of the year, whether it's Q3 or Q4 might depend on regulatory approvals and things like that. Also the pipeline is relatively well-stocked, and I'd say we have a few things with pretty decent probability of closure.

I think there is some upside potential there. On the P&C side, I said, clearly, this is where most of the, let's say, the sliding, the deterioration has come from in terms of revenue outlook.

Things have been balanced out somewhat by the large structured deal that I mentioned that came in in Q2 that wasn't known to us upfront and which has balanced things out. We've looked at the upsides and the downsides, and I think my personal opinion is EUR 39 billion would have been aggressive.

I think EUR 38 billion now looks like a very sensible, reasonable, and achievable number where I would maybe even go so far as to say we have a good chance of meeting. I feel trying to help you calibrate, you're trying to get a sense of confidence level.

I would say I feel good about the EUR 38 billion. I think that's quite a solid number now.

Thanks. [Non-English content]

The next question comes from Andrew Baker from Goldman Sachs. Please go ahead.

Hi. Thank you for taking my questions.

First one, just on the P&C Re core. I guess on the normalized combined ratio deterioration in 2Q, are you able to provide a split between the impacts from the large structured transaction and the renewal impacts?

I appreciate the guidance for the rest of the year, upward pressure around the 82%. As we think about the combined ratio into next year?

Are you able to give us a sense of how you're sort of expecting renewals to earn through there? Is there anything we need to take into account in terms of a reduction in large loss budget given property XL volume reductions or any offsetting factors?

Secondly, in ERGO, there was no change to the EUR 24 billion insurance revenue guide for the year. This implies pretty sizable growth, I think sort of 15%+ growth in the second half year-on-year.

What gives you confidence in achieving this one? Is there some sort of NEXT Insurance recapture or is there something else that gives you the confidence there?

Thank you.

Thanks, Andrew. I wasn't exactly counting.

I think you may have snuck three and a half questions in there, they do fit together as a package. I will tackle them first.

I think, on some of the more commercial aspects of renewals, it might be that Christoph will have more to say about those perhaps later. Let me just try and address the finance aspects of what you just asked.

On the normalized combined ratio, I'm going to have to disappoint you a bit here. I think I don't have an exact breakdown between the renewal earn in and the new structured deal, how much each of those contributed.

Put it this way: they're both significant enough that they were both worth mentioning. I wouldn't mention things if it was just moving by 0.1.

They're both meaningful, I don't have an exact breakdown for you. The combined ratio into next year, here I perhaps can best give you only a partial answer, because clearly we need to go through our full planning process, which has started, but it will only conclude much later towards Christmas.

We'll see what business we have on the books and the mix, and we'll obviously have to position ourselves a little bit also with respect to how we see the market shaping up for next year as well. We might have more insight after Monte Carlo and after renewal negotiations have started ahead of 1/1.

We'll know much more towards the end of next year. I wouldn't really be able to commit to anything until then.

What I would say is that the large structured transaction that I mentioned will continue to earn through most of next year, even in its current shape. I would therefore suggest the structural uplift that started to flow into our Q2 numbers, I think is going to accompany us through next year.

Whatever combined ratio we come with, I think will probably therefore be, well, by definition, will be a bit higher than what we would have done in the absence of that deal. What I would say to you is that the 18% large loss ratio that we're currently using in our normalization calculations is probably now, with the benefit of hindsight, a bit on the strict side because our mix is certainly more towards proportional and more towards less Cat-heavy business than I think we envisaged.

We try not to mess around with that during the course of the year. We're not going to change the rules of the game on how we do the normalization intra year.

I think we will need to look at that again, and I'm not sure yet where it lands. As of today, I would say probably there's more downwards pressure on our Cat ratio as a proportion of premium or our outlier ratio as a proportion of premium.

The 18% sitting here today is probably a bit high and a bit harsh on ourselves. Lastly, you're absolutely correct.

At ERGO, the run-rate is currently behind where it would need to be because you would need to do EUR 6 billion a quarter to get to the EUR 24 billion guidance for ERGO. The first factor that you mentioned is absolutely correct.

ERGO NEXT Insurance, firstly continues to grow, and secondly, is in the process of internalizing much of the reinsurance that was previously placed externally. That's absolutely true.

I would have a couple of other examples for you. The one is that our Chinese life business within the ERGO Group is going to be brought into our consolidated results for the first time.

There is premium there that would not really have been separately visible to you in the past that you will start to see in the second half of the year. The last example that I would have top of mind is our acquisition in the Baltics, where we took over the Gjensidige business, which you will also start to see some premium coming through in the second half of the year.

I think we have a few reasons there to be optimistic that the EUR 24 billion is still a realistic number.

Fantastic. Thank you.

The next question comes from Kamran Hossain from JPMorgan. Please go ahead.

Two questions from me. The first one is on, last quarter we got into a really kind of deep discussion around what the earnings in Munich Re look like and what letter that implies.

I don't really want to get into that conversation today, but just really interested in, given the very clear weakness in P&C Re versus where you thought you were going to be at the beginning of the year. I appreciate that your net income target is a combination of volumes which have been weaker, but also a combination of margin assumptions as well.

What do you think at this stage you can do to keep the earnings up? Do you think the share buyback that you've been ticking up each year needs to be bigger sooner on the 8% earnings growth?

Just maybe that's something we'll come back to. Do you think that's something you probably need to kind of pull the trigger on quite soon, kind of, this year-end, et cetera, making it bigger to keep some earnings momentum in the business?

The second question is on, I guess, where you are year-to-date. You've hit 60% of your earnings target, and I think as you both alluded to, and as I think everyone can tell, there's been some good luck in the results.

Kind of very light NatCat in Q1 and Q2, and some other kind of benefits coming your way. I would assume that EUR 6.3 billion, once you get there, you will probably try and put bits and pieces away in the balance sheet to use at a later date.

What will be the plan if you just hit a normal run-rate of losses, earnings in Q3, Q4? Will this be put away for a later date, or what will you do with that?

Thank you.

Kamran, thank you for your questions. I'll take these.

You said that you didn't want to go into all these linear versus U-shaped kind of earnings development pattern discussions. I think it's the right thing not to go into these discussions if I'm honest, because for the midterm target 2030, we very deliberately have relative targets.

We have return on equity and we have earnings per share growth, as you of course know, which gives us an additional lever. The additional lever is indeed capital management, as you also already outlined in your question.

We are more than conscious of that fact. As a matter of fact, we set these targets knowing that we had that additional lever.

I said in my introductory remarks already, we knew that we were going into a softer phase of the market when we came out with our strategy already in December. That's all not a surprise.

Therefore coming back to your questions, yes, of course, we have that lever, and we are 100% willing to use that lever. We'll discuss that in the remainder of the year, depending on the result development.

Hurricane season just started, who knows where we're going to end. Also looking at the business development, looking at volumes, looking at that potential growth of our risk capital towards the year-end, and where do we stand with solvency, but also with other restrictions we have.

All this has to be considered. Having said that, of course, yes, we are aware of the additional lever and we might use it, 100%.

Brings me back to the very nice question, what we would do with all the money we make, if we would make it at year-end, which is a great question. Let's await the hurricane season first.

There's this German saying, I'm not sure if that exists in English as well, that you only distribute the bear after you hunted it. We are still in the hunting phase here.

I'm not sure if that same saying exists in English.

I think at least it's a new one for me. I will Google it straight after the call.

More seriously, of course, looking at the revenue development, as always, set assumptions in our balance sheet in a conservative way. We always did that.

You know the reserve preview is coming up towards year-end. We will look into all the levers we have and then take a diligent, and as always, cautious position in that respect.

Yeah, it might use potential, which we then might have or not, depending on the season. You know us well.

Yeah, it's too early to talk in more detail about stuff like that.

Thank you very much.

The next question comes from Ivan Bokhmat from Barclays. Please go ahead.

Hi. Good afternoon.

Good morning. Thank you.

My first question would come on the Life & Health Re result. Clearly comes ahead of the run-rate, and we see strong growth in transactions.

I was just wondering if I could ask you about those new transactions. How do you think about this new business in terms of margins?

Also I've noticed that you've been quite into LTC transactions, the ones that have been announced. How did that fit with your well-defined risk appetite that you were talking about?

Because I think this one in particular is a standalone LTC. My second question is just on the investment income.

I think, Andrew, you've mentioned that the reinvestment yield is nicely up to 4.3%, so that's 90 basis points above running yield. How do you think about the shape of this being reflected in the running yield in coming years?

Thank you.

Ivan, I'll take the first one. Large transactions, and specifically LTC.

We wouldn't write large transactions if we were not satisfied with the economy behind these large transactions, which is always a risk return perspective we are taking in light of the book as we have it overall in our book, also including diversification and similar things. Maybe more specifically then to LTC and you're referring to one transaction which has become very public also.

In the normal course of business, and many of you are aware of that, we have very little appetite for LTC as a standalone business, and that's unchanged. However, we evaluate current and future client partnerships holistically, of course, and we are also willing to work always with our clients to explore then customized solutions on our business relationships, while achieving, as I said, appropriate returns on the business, and the inherent risk.

This is a general strategy. More specifically, let's be open.

On Manulife, the one transaction which is public. When I look at that transaction, we considered the relationship over the course of the last 50 years with Manulife, and our expanded partnership going forward.

That's part of our view on that business. We also looked, of course, at Manulife's track record in how they manage that business organically.

This transaction is just another example of how we can partner with clients, and then a number of multiple ways to address clients' needs and also meet our objectives. Therefore, this is very specific business with Life Re.

It's not one size fits all. Each single transaction is different.

We do have the expertise, we have the teams, we have also the transaction certainty which you need to have to make these things work. I think we can be very proud on what has been achieved, and we are very satisfied also with that.

Can I make a small follow-up on LTC, if possible? Maybe you could talk about the experience variances over the past, let's say year.

Mortality has been positive. Has there been any offset from other elements that are noteworthy?

Sorry. Thanks.

We don't break that out, but you can see overall the variances are positive this year.

Thank you.

Ivan, it's Andrew speaking. I will come back to your other question, which is about investment income.

Indeed, as you pointed out, the reinvestment yield in Q2 was very good, at 4.3%. I probably would want to manage expectations a little bit, that I'm not sure we'll be able to show 4.3% every quarter.

That is one of the more volatile numbers we have. Some quarters we have lots of cash to reinvest, other quarters we have rather little.

One or two positions taken can sometimes swing the number a bit up or down more than you would expect. It probably also depends quite a bit on the particular mix of currencies that we need to reinvest in a particular quarter.

I think at the moment, if we're doing a lot of U.S. dollar reinvestment, that probably helps because of where yield curves are.

I would want to perhaps just sensitize you a little bit to the fact that the reinvestment yield itself can certainly fluctuate a bit from quarter-to-quarter. We have benefited from higher interest rates, and I think that does give me some optimism that we can continue to show at least a good reinvestment yield in the coming quarters.

As Christoph commented earlier, our colleagues have been finding, I think, decent opportunities offering reasonable yields. Coming to the question of running yield and how that now translates.

The running yield that we showed in Q2, which was the 4.0%, I think, I won't say it's artificially high, but it clearly was helped by a couple of specific factors. One was the catch-up effect on the inflation-linked bonds, which I talked about already in Q1, in sort of mitigating why the result wasn't very high in Q1.

I'm delighted to see that that catch-up effect has come through exactly as planned. Secondly, our dividend portfolio, sorry, our equity portfolio does include a pretty reasonable portion of European equities paying dividends in Q2.

We do have the seasonality of the dividends coming through. That's why I would want to say 4.0% on the running yield is probably higher than, let's say, a through the year underlying rate at the moment.

I also feel we should hopefully be generally achieving something a bit higher than the 3.5% that we had back in Q1. Let's say the completely normalized through the cycle underlying running yield is probably somewhere between those two numbers, if you want to pick 3.7% or something like that might be a more reasonable guess.

I think then, given that differential between reinvestment yields and running yields, I'm cautiously optimistic that we will continue to show over time, the uptick, perhaps 10 basis points-20 basis points, that kind of range, as the reinvestment yield helps to pull the running yield upwards.

Thank you both.

The next question comes from Will Hardcastle from UBS. Please go ahead.

Morning, everyone. Is it possible to get any more color on this large structured transaction, whether it be sort of annual revenue impacts, the type of risk, level of capital intensity, and whether it can go beyond 2027?

I mean, my very quick calc, it sounds like you're saying it's at least half a point maybe on that combined ratio impact, which maybe implies it's as much as 5% of your annual P&C revenue, but I could be way out. Any help, you don't need the exact numbers, would be useful.

Just thinking about how you manage those client relationships, bigger picture strategy-wise with this level of volume declines. You've clearly walked away from plenty of business correctly when it's not meeting return hurdles.

Is there a limit to how much tactical business you're able to walk away from? Anything sort of balance of how much of the book is structural versus tactical would be really helpful.

Thank you.

Okay. Will, I think on the first question, it's Andrew here.

I'm sorry to disappoint you. We really can't give you much more on that.

It is a special situation. We can't really go into individual transactions with clients that I think might be separately identifiable if they haven't already been released to the market.

The only thing I can offer you is in terms of earning period. Even as the transaction stands today, realistically, I am expecting earning through 2027.

I don't think there's much of a tail into 2028. There might be possibilities to extend that, also by mutual agreement.

I think we would make that decision when the time comes.

Yeah. Will, I'll take the more general question.

Tactical versus client relationship, I would summarize it. Well, it really is case by case.

Each individual client is different. We have client strategies.

With clients where we have long-term partnerships, of course, we stick with those clients, and it's a trusted collaboration also in softening market environments as it is also in hardening market environments. We jointly, with the clients, work on the program, on the structures, on the terms and conditions, on the pricing, all in a very friendly, long-term oriented way, I would say.

That wouldn't change, also not in an environment like where we currently are, because this is really meant to be long-term. By the way, this is one of the really big competitive advantages we have.

With our strong capitalization, what we can offer our client is that even after the biggest possible cut events, we are still there and offering higher capacity if needed. We could double capacity in those situations where the need is highest for clients.

I'm not sure if many other players in our market are able to do that. We can, most certainly.

This is really one of our biggest strengths. Having said that, of course, there is also markets, clients who are looking at reinsurance in a much more tactical way, much more short-term oriented, much more opportunistic.

With these kind of relationships, of course, already to protect ourselves, we need to act similarly opportunistic or tactical sometimes. We do, and we are fine with that as well.

We are serving these clients as well. There, obviously, also our perspective cannot be as long-term oriented as it is with our longstanding partners.

As I said, it's really client by client. It always depends very much on also what the client wants from us, how the client sees the relationship.

We are really able to mirror whatever the client wants to see in us to offer that and yeah, very happy to serve all clients really with a very long-term perspective. Can I give you numbers?

Can I give you a split? I think that was the last part of your question.

I'm sorry, I can't. I'm sorry, I cannot go in, and I would not even have those aggregated numbers.

Of course, a lot of our business is really based on these long-term relationships.

Next question comes from Iain Pearce from BNP Paribas. Please go ahead.

Hi. Morning.

Thanks for taking my questions. The first one's just coming back to the LTC deal with Manulife.

If you could just give us a bit more color on the sort of exact risks you're assuming. Are you just taking full ownership of all the reserves, so assuming all the risks associated with the long-term care book, or are you just taking portions of the risk on that LTC transaction?

Just on GSI and the sort of slightly lower run-rate versus the midterm target on the top line growth FX adjusted, could you just give us a bit of a breakdown on the sort of subsegments within GSI and sort of which ones are running above or below plan? Because we're hearing quite mixed messages on some of the pricing data that we're getting on specialty lines at the moment.

Just trying to get a feel for where might be above or behind the expectations. Thank you.

Iain, on the LTC deal, I can make it very brief if you want. There is a press release out there on the deal where you find all the details which we can talk about publicly, and there's not really anything else we would like to comment publicly.

If I summarize at very high level, it's a proportional treaty, and in that respect, the structure is not very unique. Yeah, you can Google it.

You'll see it, and I think all the details are in that structure. GSI, Andrew, are you?

Yes, I can take the question about GSI. The sub-segments.

Iain, you will obviously be able to see the revenue breakdown for the four revenue-producing units within GSI in our slides. You can see the status as of today.

In terms of growth rates going forward, I would say to you, areas that are more likely to produce growth at the moment are Hartford Steam Boiler, which continues to do very well in the equipment breakdown market. I would also mention in global specialty global markets, so the international business, we are establishing a footprint more in continental Europe in some lines of business like surety, where we have been underrepresented in the past.

We are even expanding into Australia and other areas like that, where we're underrepresented. We have some examples like that.

In the North American excess and surplus lines market, we obviously have to be more discerning now as that market becomes more challenging. For example, just to take one recent example, the colleagues have released a new real estate professional liability product.

There is still wide space in some areas of the market where I know that our brand name is very welcome and our capacity is very welcome, and which we probably have been punching under our weight up until now. Those are certainly some areas where I would see growth possibilities.

The next question comes from Vinit Malhotra from Mediobanca. Please go ahead.

Yes, good morning. Thank you.

[inaudible], I have one question on the structured transaction you talked about and one on specific on the July renewals. Just trying to understand where the structured transaction sits in the Q2, because even in the July.

Is it that it's been fully taken up in the July renewals, but we'll be earning too, and a very small effect in Q2? If that is the case, has it affected the normalized in Q2 or not really that much?

It's just trying to understand where this very large structured transaction sits. The reason I also ask is because slide six does have this one-off transaction mentioned in the last paragraph, but I'm not sure whether this is the one you're referring to.

Just on the slide seven, the property proportional. We saw your peer yesterday grow a little stronger there, whereas you've been, even now, a bit more cautious here, it looks like from the bubble chart.

I'm just curious whether, is there any major differences in proportional property risk that you're seeing compared to other players in the market? Thank you.

Vinit, let me start. It's Andrew speaking.

Let me try to help clarify the impacts of the structured deal. First thing to say is that it's not in the July renewal report, so it's a rather special one-off deal that began intra-quarter.

It was by no means oh, sorry, we have an echo. Apologies.

I think it's sorted now. It started intra-quarter.

It wasn't part of the renewals campaign or renewals negotiations or anything like that. I think if we had included it in the July renewal reporting, it would have completely distorted things.

You can say it's not in there. Okay, so you can basically say that the July renewals are kind of clean in that regard.

They represent what was happening in the market and in our book, sort of excluding the large deal. However, we did start to earn revenue from this large deal in Q2.

Therefore, that deal has started to affect the combined ratio. Given the nature of the deal, it's pulling the combined ratio upwards, and we have not done anything to normalize that deal out, which means that it has pushed the headline combined ratio up, and it has also pushed the normalized combined ratio up by the same amount.

We have not done any normalizing with regard to that large deal. Okay.

I'll take the property proportional question. Obviously, I can't comment on the market on peers.

What I can say on our book is that we had only very small movements across various regions in property proportional Which added up to this slightly negative volume development you can see on the slide. All in all, I would even say rather stable when it comes to volume and a bit of a price change, as you can see on the slide as well, but not really spectacular.

Sure. Thank you very much.

Thank you, Andrew.

The next question comes from James Shuck from Citi. Please go ahead.

Thank you. Good afternoon.

My first question on the P&C Re normalized combined ratio. We're around at the 82% level at the moment.

You mentioned that you expect that to kind of trend up slightly for the remainder of the year. If we land at about 83%-84%, then you've still got the deal to come in.

Next year, we're looking at probably the earn through of the rate reductions year-to-date, whatever the renewals bring in next year. We're looking at a kind of normalized level that's well above the 79%-83% that you're guiding for, and I appreciate that's a 2030 target, and you've been clear that you will operate outside of that in the near-term if you have to.

My question is really, what's to kind of stop the reported normalized combined ratio trending up to around 86%-87% next year? Will you look to manage that through whatever levers you've got available?

I'm thinking about loss picks and the rest. That's my first question.

Secondly, if you're unable to answer this one, perhaps I get a chance at a third question. I just wanted to ask about ERGO International, so NEXT.

You did EUR 337 million of gross revenues at 1H. Please can you tell me what Munich Re's underwritten share of the MGA revenues was at 1H, and how that will trend through the rest of this year and into next year?

If you're able to tell me what a look-through combined ratio for NEXT is too, please. Thank you.

James, it's Andrew speaking, I will attempt the first one. You are rightly saying that the normalized combined ratio will trend upwards for the rest of the year.

Indeed, I said that. That upwards trending includes obviously both the earn-in of the renewal results, it includes some further volume expansion of the structured deal that I just mentioned.

I don't know yet where the normalized combined ratio will land relative to an 83%. I think you correctly pointed out that corridor of 79%-83% relates specifically to the 2030 year, and we did not say precisely what the trajectory would look like between now and 2030.

I had previously said, you may have heard me say, that I had no concrete knowledge or expectation that we would go above 83% on the journey, or at least that my base case wasn't that we get there. I would have to concede at this point it has become somewhat more likely, because even if you set aside the renewal results, this large structured transaction has changed the game a little bit.

It has brought about a bit of an upwards structural shift. I think we will need to look at that very carefully in our planning process in thinking about the guidance for next year.

I really don't want to preempt that guidance for next year. What I can at least say is we do not plan any change in our reserving philosophy or regime in order to mitigate the effects of the cycle.

We would not, let's say, compromise on the current level of conservatism that we have in our loss picks, which we think is about right, to sort of engineer the outcome. That's not in our plans.

The ERGO NEXT question. To start with, of course, we expect ERGO NEXT's top-line to increase significantly, and there are two drivers to that.

As you know, one is the strong organic growth. For example, enhanced product categories, enhanced sales activity, sales success, also the additional internalization of business onto the own balance sheet.

I can't give you the exact split. What you see in the revenue number as we publish it is, of course, only the revenue which we have internalized already.

I can't give you the exact split. What I can tell you is that this internalization has started, is ongoing, it will take another year or two until the entire business is finally all booked in our own P&L.

The next question comes from Emanuele Musio from Intesa Sanpaolo. Please go ahead.

Hello. Hi, thanks for taking my question.

I just have a quick one. It is on the reinsurance pricing that appears to be further into the softening cycle than primary pricing.

Do you see a risk that primary pricing catches up over the next few quarters? If primary margins start to compress, could that drive higher session rates or greater demand for insurance protection, ultimately putting a floor under insurance pricing?

Do you have any indication at this point, pointing in this direction?

Well, I'm not sure if we are the best one to be asked. Our clients have two options, basically.

If the price with us goes down, they can internalize the margin, or they can pass it on to their clients and use it to reduce price. I think both is already visible in the market, depending on where the market is and who the client is.

I wouldn't really see that as a source for additional softening in the reinsurance market, if this is the question. We'll see how the development goes and how primary insurance really act.

You should probably ask them rather than us.

Thank you.

The next question comes from [Henry Hatfield] from Morningstar. Please go ahead.

Good afternoon. Thank you for taking my question.

Just one for me, actually. Looking back at first quarter 2025, obviously there was a rather a large NatCat impact from the L.A.

wildfires. It looks to me like the European wildfires, well, the L.A.

wildfires burned around 10% of what the European wildfires have burned as around early August. Potentially the European wildfires are around 10% of the economic damage.

I was wondering if you could kind of illuminate a little bit if that's what you're seeing so far, whether that's a good way to think about it or you're seeing something else. Thank you.

Henry, it's Andrew Buchanan speaking, I will attempt this one. There's obviously a broader societal issue that we are seeing hotter weather and wildfire risk going up, it's very important that the insurance industry plays its role in mitigating that, both primary and reinsurance, we absolutely stand ready to do so.

I think coming quite quickly onto the financial impact. The events, particularly in Spain and France, that we've seen recently are still ongoing.

I think losses are not clear yet, not stable, I think we will need a bit more time to really get a feel for that. At least so far, I would say to you the potential for economic losses, thereby insured losses, does appear to be, let's say, of a lower order of magnitude, what we're seeing in France and Spain, because quite a lot of the fires appear to have been burning in clearly non-urban areas, I guess more forested and rural areas.

Although tragically, I think some hamlets and villages have been affected. Certainly, the damages that flow through to the insurance industry, I think first and foremost, are heavily linked to the value of property that is affected.

It was an entirely different scenario in Q1 of last year, where you have incredibly high value homes in places like Pacific Palisades, there was the Eaton fire as well, which I think was in quite wealthy parts of Los Angeles, where the value of the insured property that was affected was really remarkable. So far, that doesn't appear to be the case in the fires that are burning in Europe.

It would appear to us at least that our exposure to other kinds of losses, like agricultural type losses or, for example, if there had to be evacuation and relocation costs, if an urban area had to be evacuated, that we don't have such major exposures in that area. At least at this stage, there's no indication that those events are going to be sort of quarter impacting events that would have a big impact on results.

Beyond that, I would really stop short of really attempting any kind of quantification. We would need a bit more time to assess that.

I think it also goes back to the general point about insurance penetration and how important it is that we strive for higher insurance penetration to be able to stand behind people when they suffer losses from events like this.

That's very helpful. Thank you very much.

The next question comes from Jochen Schmitt from Metzler. Please go ahead.

Thank you. Good afternoon.

Just one question on the investment result in Life & Health Re, as well as in Global Specialty Insurance. You reported slightly negative fair value changes for these two segments.

My question is equity exposure here close to zero and/or which asset classes caused this slightly negative fair value change in Q2? Thank you.

Jochen, the first thing I would say to you is that the investment results that we show for each of our segments individually isn't really so much a function of the business strategy of each of those divisions. It is rather a function of which assets we happen to be holding in which legal entities, and those then get allocated to the segments that use the balance sheets of those legal entities.

If you do see a small negative fair value change, for example, in a particular segment, it isn't really because that segment did something wrong or did something on the business side. It may be just simply an idiosyncratic choice that our investment managers made about which assets to hold where.

I think you mentioned Life & Health reinsurance in particular, and the EUR-6 million fair value change that I've just found on the slides that you referred to. I would say in the grand scheme of things, that's an extremely small number in our overall portfolio.

It might just simply be a mark-to-market on one individual position somewhere, which I wouldn't know off the top of my head, I'm afraid. I would encourage you probably to look much more at the overall investment result, at least of the two major business fields.

Okay. Thank you.

Just to follow up, if I may. I appreciate that this is a very low negative number.

No doubt about that. Nevertheless, is it right to conclude that the vast majority of your equity exposure within the reinsurance segments is allocated to non-life Re?

Would that be the right conclusion to take?

Yes, that would be correct. Going back to what I was saying about legal entities, it is the case that we hold relatively more, in fact, probably the majority, of the riskier assets, that are going to fluctuate more in entities that are heavily backing the P&C reinsurance Segment.

All else being equal, I would expect the investment result for GSI and for Life & Health Re to be less volatile and therefore probably on average, a touch lower as well. Directionally, that would be correct what you said.

Thank you very much.

The next question comes from Ben Cohen from RBC Capital Markets. Please go ahead.

Hi there. Thanks for taking my questions.

I just wanted to ask, firstly, given where we are in the year and how much of your P&C Re book presumably has already been written, how much confidence does that give you in the new revenue guidance that you've given? I appreciate you don't split out P&C, and you were saying there might be a bit of an offset on the life and health side.

What would you see as the kind of major variability there? My second question was on GSI.

I guess the expense ratio was a bit higher in the quarter, but given what's going on in those various markets, would you say that there is underlying upward pressure on the combined ratio that you're going to report in coming quarters and into 2027? Thank you.

Ben, it's Andrew here. Firstly, confidence in the revenue guidance, the EUR 38 billion now.

I would say my confidence is good or it's strong. We looked carefully at the upsides and the downsides that we have, and we think that the EUR 38 billion gives us a very solid chance of meeting that updated guidance.

As you rightly pointed out, we've now finished all of the material renewal dates, which means we have significantly more certainty, already than we had at Q1. You asked where would the variability come from.

There's perhaps one point I would bring to your attention, and we've maybe discussed this a little bit in the past as well, which is that on all of the proportional treaty reinsurance business, it's all very well to go through the renewal dates and to essentially agree the price with the client. The clients themselves don't know yet exactly how much business that they will write.

Even though we know the proportional percentage that will be ceded to us, we therefore, of course, also do not know exactly what the absolute volumes are that will end up with us. There is always going to be that kind of uncertainty where we are a little bit coupled together with what's happening in the primary market.

Then there are some parts of our reinsurance business, even in P&C, that sit outside of the treaty renewal seasonality. In particular, our facultative business and large corporate business, which is much more looking at individual large single risks that would be presented to us sort of whenever they need to be insured, which doesn't necessarily come with a renewal date.

Those are some reasons also why there is still some variability left for the rest of the year. I said earlier on Life & Health Re, the pipeline does actually offer some potential for upside there too.

We consider those upsides and downsides to be quite nicely balanced at this stage. I certainly think the cone of uncertainty has narrowed compared to where we were in Q1.

Thanks.

On the GSI expense ratio, what I would say to you is that the overall expense ratio for GSI is weighed quite heavily by acquisition costs. Basically, commissions that we would then be paying to the distribution network, the wholesale brokers, and other participants in the chain.

Those have been relatively high recently. It doesn't necessarily represent us becoming less efficient in terms of our own administration costs.

Having said that, I think your perhaps second and more important question about GSI was whether we saw necessarily an upwards pressure, an upwards trend on the ratio, and that we don't currently see. I think our colleagues also in GSI are doing a good job in navigating the markets and defending profitability.

We've been managing to deliver combined ratios just a little bit below the 90% guidance that we have. My personal feeling at the moment is that's quite a fair and reasonable reflection of what the business is delivering.

We don't have the sort of relentless mechanical upwards pressure of earn in that we have in P&C Re coming from the renewal dates.

Great. Thank you.

The last question comes from Ivan Bokhmat from Barclays. Please go ahead.

Hi. Thank you very much.

Sorry for dragging the call for longer, I have two small follow-ups. First one on ERGO International.

I noticed that on slide 24, you're showing the USA combined ratio of 88.6%. Is that ERGO NEXT?

This is a level that's actually lower than I would've thought for a startup. Is that the combined ratio that you anticipate the business will run at?

The second question is related to Middle Eastern losses. I think the industry loss estimate has now increased after the recent spout and hostilities, maybe to EUR 3 billion-EUR 4 billion.

I think what you've disclosed last time was under EUR 100 million, which is a lot lower than what your share on the typical large man-made would be. Is there a way to think about this a bit differently?

Thanks.

Right, Ivan, it's Andrew. I'll take those.

On ERGO International, the short answer to your question is yes, the 88% is ERGO NEXT. I'm conscious that we've delivered or they have delivered that combined ratio two quarters in a row.

I also agree with you. I think that's really a good number at this point in their development.

It's pleasing, but I would actually take this opportunity to manage your expectations a little bit now that you've asked the question. I think we've had two good quarters there, but we don't yet consider the 88% to be the new normal that you should expect in all quarters.

I think we are at a point where we're probably going to make underwriting profits more often than not, so at least below 100% combined. Yeah, please don't hold us to the 88% as the new normal.

I absolutely think we could see higher combined ratios in the coming quarters. I would also say in this regard that the overall break-even point of NEXT has not moved forward, so we are still saying that that would be by the end of next year.

When I say overall break even, I mean the sort of bottom-line net result, not being negative, because we are still, and NEXT is still investing quite significantly in its capabilities, so there are, in particular, expenses, as well as income by the way, MGA income, that is outside of the technical result and outside of the combined ratio that are not captured in the 88%. We still have some way to go.

We are not declaring victory yet, but of course, the 88% is encouraging, and I'm quietly pleased with it. On industry loss estimates, you were breaking up a little bit in the first part of the question, I think you were talking about the Middle East and the Strait of Hormuz, is what I think you were asking about.

You're right. Industry loss estimates might be creeping up.

For us, we really keep a watching brief on this, and we don't think with our book and with our exposures, there would be any reason to do anything more after the EUR 90 million that we booked in Q1. For us, at the moment, it's rather stable.

Thank you so much.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Becker-Hussong for any closing remarks.

Thank you very much to all of you for your questions. If you have further questions, please hesitate to get in touch.

Otherwise, hope to see all of you soon. Have a nice remaining summer, all the best, and have a nice weekend.

Bye-bye.

Ladies and gentlemen, the conference is now over, and you may now disconnect your lines. Goodbye.