Yes. Thank you, Moritz, and good morning, everyone.

A warm welcome to Munich Re's Q3 2024 Earnings Call. Today is business as usual.

Our CFO, Christoph Jurecka, will start with his opening remarks before we will go into Q&A. With that, I hand it over to Christophright away.

Well, thank you, Christian. Yes, good morning, everybody, also from my side.

It's always a pleasure to present our numbers to you. And yes, I'll go into my introduction right away.

We had a prerelease already, so you're aware of the fact that we achieved a net result of EUR 930 million in Q3, which was impacted by above-average major losses from natural catastrophes. While the nat cat losses are inherent to our business model, and we are being paid for taking it off our books, prices must continue to reflect the underlying risks and incentivize risk mitigation.

With another year of industry nat cat losses above USD 100 billion, the demand remains high as clients seek protection against volatility in their books. Against this background, I'm very pleased that our underlying performance across all lines of business remains very sound and increasing diversification of our earnings profile is paying off.

We were able to largely compensate for a lower Q3 result in P&C reinsurance with continued strong earnings in life reinsurance, a solid development at ERGO and a pleasing investment return. Our overall profitability remains very strong with a group ROE of 20% after 9 months, which is well above our target.

Now let's look at the Q3 earnings drivers in more detail, starting with the investment result. Supported by positive fair value changes due to rising stock markets and lower bond yields, we posted an ROI of 3.6%.

Our investment portfolio is proving resilient to the recent decline in interest rates. Also, the reinvestment yield fell to 4.3% in Q3, it continues to exceed the fixed income running yield and supports strong regular income.

With a 9-month group ROI of 3.4%, we remain very well on track to deliver on our full year guidance. In Q3, a major positive factor was the market value gains of 0.8 percentage points.

Please bear in mind that we consider currency as an integral part of our investment result. And as we often use currency positions as a hedge against adverse developments, it is not unusual that the currency result is negatively correlated to market value gains in our investment result.

This quarter, the good investment result was then also partly offset by currency losses of almost 0.7 percentage points. Now turning to the business fields and starting with reinsurance.

In Life & Health, we already surpassed our initial full year guidance for the total technical result after 9 months by almost EUR 200 million, a clear success story. We continue to benefit from the strong new business growth early in the year and from positive experience across all lines of business.

The ongoing pleasing development of our FinMoRe business includes negative currency effects of around EUR 80 million in Q3, which partly reversed the positive effects of the first half year. While the total technical result of EUR 428 million falls short of the high level in the first 2 quarters, it is certainly much closer to what you would consider a normalized run rate for the business.

The high CSM level of EUR 13.5 billion provides a sound basis to continue to support a strong total technical result also going forward. Now let's turn to P&C reinsurance.

In Property Casualty reinsurance, the combined ratio of 90.5% in Q3 was elevated due to above-average major claims of 23 percentage points. The ratio includes a discount benefit of around 8% and interest rate-related reduction in the discount of basic losses was offset by a higher contribution from major losses.

The impact of the loss component on the combined ratio was lower than expected and rather neutral as the regular release was offset by the impact of lower interest rates. While nat cat losses are randomly distributed over the quarters, I'm all the more pleased that the underlying performance continues to develop very favorably.

Although not at the exceptionally low levels of the previous 2 quarters, the normalized combined ratio of 81.3% in the third quarter on the one hand, reflects the earn-through of the overall improved margins. And on the other hand, as expected, business mix effects contributed to an increase in Q3 versus the first half of the year.

After 9 months, the normalized combined ratio amounts to 80.4%, better than our 82% guidance. As usual, we will reassess reserve uncertainties as part of our annual reserve review in Q4.

Although our actual versus expected analysis shows a continuation of an overall very favorable reserving trend, we intend to use the better-than-expected development of the normalized combined ratio in the year-to-date to even further strengthen the reserve prudency for new business. Hence, it seems reasonable to expect a further increase of the normalized combined ratio in Q4.

Nevertheless, the full year figure should end up slightly better than our target level of 82%. Turning to Primary insurance now.

ERGO delivered a net result of EUR 164 million in Q3, somewhat below the pro rata run rate, mainly due to elevated nat cat losses in the international segment. The German Life & Health business posted a pleasing net result of EUR 73 million in Q3.

The total technical result was in line with expectations. In P&C Germany, we saw an overall solid operating performance.

The combined ratio of 86% in Q3 was affected by continuously high claims inflation in the German motor business and major losses slightly above expectations. It benefited from positive seasonality of acquisition costs, which will catch up in the fourth quarter.

Segment delivered a net result of EUR 68 million in Q3, supported by a sound investment result. International business was affected by major losses related to Storm Boris, which caused severe floods in Central and Eastern Europe.

Excluding this effect, the Q3 net result of EUR 23 million was in line with expectations. Particularly the Polish and the Austrian businesses were affected by Storm Boris with an impact on the total technical result of minus EUR 52 million.

In addition, we saw an unfavorable claims development in our Spanish health business. The segment combined ratio was elevated with 96.1%.

The overall technical profitability of the Life & Health business internationally was in line with expectations, also supported by a positive experience adjustment in the Belgian health business. Now just a few remarks on capital.

The group's economic position remains very strong. Solvency II ratio slightly increased to 292% in Q3, driven by the good operating performance.

I would like to conclude with the outlook for 2024. Following our very strong development in the first 9 months, we expect higher revenues and a higher net profit for the full year.

In reinsurance and in ERGO, we expect EUR 1 billion higher net insurance revenue each, the latter driven by the international business. Net profit of the group is expected to exceed our full year target of EUR 5 billion, driven by higher earnings in reinsurance.

While ERGO is expected to deliver on its EUR 0.8 billion profit guidance, we no longer expect to meet the combined ratio targets. In P&C Germany, we lifted the combined ratio outlook to around 89%, which is still an attractive level given the current inflationary environment in the very competitive motor market, and also, the lower interest rates.

At ERGO International, we now expect a combined ratio of around 92%, taking into account elevated major losses related to Storm Boris, as mentioned, as well as the pronounced medical inflation in the Spanish health business, which is being addressed with a set of targeted measures. Based on early indications, we expect the loss from Hurricane Milton to be smaller than that of Helene.

However, due to major losses above expectations in the first 9 months and Q4 seasonality, we increased our combined ratio expectation in P&C reinsurance by 1 percentage point to around 83%, as usual, subject to large claims development in the remainder of the year. In Life & Health reinsurance, we reflect the strong development year-to-date by lifting the full year guidance for the total technical result to EUR 2 billion.

With this, I'm at the end of my opening remarks, and I look forward to answering your questions. But first, I'll hand it back to Christian.

Thank you, Christoph. So, we can go right into Q&A.

As always, I'd like to remind you that you should please limit the number of your questions to a maximum of two per person and then please rejoin the queue should you have follow up questions. Thank you.

The first one, are you able to split the Q3 P&C Re losses out by specialty and sort of the more pure-play P&C Re? And then just more generally, how are you thinking about the sort of balancing the reduction in frequency exposure in the P&C Re side from obviously, the higher attachment points versus growing your specialty business?

How are you thinking about that trade-off? And then secondly, just on the Life CSM, it looks like it was your lowest quarter of CSM new business since the introduction of IFRS 17.

Is this just usual quarterly volatility or is something more structurally changed here?

Andrew, thank you for your questions. On the large loss side, this quarter, GSI was also heavily affected.

So, it was not only reinsurance to start from that angle. In particular, Hurricane Helene was an event which also affected GSI quite significantly.

So, I would probably estimate today a split of 50-50 as a split for Hurricane Helene, if you would think about the split between GSI and P&C Re. The other events, most of them are more pronounced on the reinsurance side.

But yes, Helene was indeed a significant GSI event as well. I cannot give you precise numbers at this point because we don't close our books on time yet to have everything readily available when we have our call.

This will only start next year then. But yes, what I can confirm, and you heard it already is that also GSI was affected quite a bit by large losses this quarter and the volatility hit also GSI.

Your question also was how do I think going forward about the potential conflict between underwriting on the reinsurance side, where attachment points have been moving up quite a bit in the entire U.S. market, more specifically, but then also having a primary insurer who is obviously also insuring losses from the first dollar onwards sometimes at least.

And there, I would differentiate, I mean, those are different businesses and underwriting works differently in these various businesses, and you have also other techniques how to deal with volatility. And therefore, I think it will be good to have those numbers separated out as of Q1 next year, then we can have a more specific discussion.

But while it made a lot of sense to move attachment points up on the reinsurance side, on the primary side, the main measure you have is obviously pricing. And then you can think about some reinsurance protection as well, and you can do a lot on the underwriting side, and also, think about in which areas you would like to have what kind of exposure or concentration risk is something you have to manage.

So, as I said, it's a bit of a different approach depending if you're doing it on the primary side or on the reinsurance side. But again, we will be able to talk more precisely about these things next year.

Then on the Life side, Life CSM, indeed, this quarter, the new business was lower than the first half of the year also in the first 2 quarters. The reason is very clear.

We were benefiting from single transactions in the first half of the year, while in Q3, nothing like that really happened. And therefore, the new business was more modest in that regard.

These large transactions, and yes, even if they are not as large, a lot of the new business in Life Re is very transaction-based. And therefore, in a way, hard to predict.

And there are always some quarters where you write more new business and others where you write less new business. And therefore, Q3 again was a bit muted.

My first time on this call for a while, so apologies if I sound very silly. I had 2 questions.

One is the error rate. And the other one is, can you give us a figure for next year?

Sorry, I'm being really lazy here. Anyway, the error rate at the dinner a month ago, your CEO very kindly explained that you kind of check large losses and see if you can get payback and where you can't get paid back, that seems to be an error.

And you said now the error rate is I think the figure was EUR 29 million. It used to be EUR 300 million.

And I just wondered, have you tested the recent events against this? And what is your conclusion?

I suppose it's same question as Andrew's, but in a slightly different way. And on the profit going forward, I know I'm asking for profit, which is very unfair, but I suppose I can really limit it to the life reinsurance.

The impression I have from the way you're talking is that the lumpiness in the new business really does affect the results. So, I'm just wondering this new guidance for the year of EUR 2 billion of technical results, is it something you see as sustainable?

Yes. Well, thank you, Michael, and good to have you back on that call.

Well, on the nat cat side, we should never be too distracted by a single quarter when we think about profitability of the nat cat business. And you obviously, you're aware of that anyway.

And in Q1, when we had a very beneficial quarter with respect to nat cat, also we didn't discuss if it was now maybe overly attractive. Now Q3 was more elevated.

So, these things happen. There's a lot of volatility.

The way you have to look at this business is really multiyear long-term and a very important ingredient is obviously the ability to also adjust prices going forward, in particular, in an environment where climate change plays a major role, and we are all experiencing an increase of those events. And this is what I think drove also the price developments over the recent years where this market hardened significantly, rightly so, given the higher losses also we are experiencing.

And this is also the reason why we think and I think I said in my introduction that the right price is absolutely a requirement to stay in that business and to continue with that business. And our clients, but more importantly, also the end customers of the primary insurers have to pay a risk adequate price.

Otherwise, neither us nor the insurance industry overall. Neither the reinsurers nor the primary insurers will be able to cover the catastrophe risks going forward.

I mean, if the losses are higher than the premiums, it just doesn't work. Therefore, we continue to be, I mean, very optimistic and see that as a very integral part of our business proposition.

And we are deeply convinced that we make money in that business line. Life Re, there is some lumpiness.

And if you look at the full year result, it also even makes a difference if you write a large treaty in the first quarter and then you already enjoy the higher earnings for 3 other quarters or if you write a large treaty in the fourth quarter even. So, there's even technicalities to be looked at.

But if I look for the year to come, I think the first half year we had in 2024, new business was really outstanding. If you look at the new business value, really huge.

So, you cannot expect that to happen every half year again. On the other hand, what we saw in Q3 now was probably the lower boundary.

So, therefore, going forward, I think something in between is probably a fair way or a fair approach how to look at our guidance. To translate that, I mean, now we increased our guidance for this year to EUR 2 billion.

The initial starting point was EUR 1.45 billion. So, if you translate what I just said, something in between, my personal expectation, and again, we talk about outlook later this year only.

So, it's too early to say really. But I would expect it to be somewhere in the middle between the 2.

Somewhere between the EUR 1.45 billion and the EUR 2 billion, given the fact that it's a bit lumpy. This year was extraordinarily good, but it will be more than what we saw in Q3.

I think that's it for now.

Two questions from me. The first one is just on the reserving comments you made.

I think what I'm kind of curious about is that from what I've understood in kind of recent conversations, you kind of have very limited headroom to add to reserves. So curious on like what the motivation is to maybe use some of the better-than-expected normalized combined ratio in the fourth quarter?

And also, any views on where you sit in your best estimate range, particularly with an eye on maybe one of what your peers said earlier this morning. The second question, just on the normalization on the P&C reinsurance combined ratio.

I've kind of assumed it would get a little bit worse than maybe it was. I mean 80.4% for the 9 months is a spectacularly good result.

Is that a good starting point for us for next year? And if not, what are the drivers that might make that a different number?

Yes. Thank you.

Well, on the reserving side, yes, so do I have any indication that anything is going wrong in the reserves? Not at all.

It's the opposite. So, where we look at our actual versus expected numbers, they all continue to be on aggregate very positive.

But then at the same time, we are releasing 5% of our reserves as a guidance every single year anyway. Our book is growing significantly.

So, 5% in relative terms means higher absolute numbers every single year. Who knows where inflation goes after the U.S.

elections, I think we do even know less than before. So, I'm just saying the environment is uncertain and in an environment which structurally is uncertain, to be as much as possible on the safe side is something which is -- I mean, what we did over the last 5 years anyway, always.

So therefore, I think it's nothing new. It's just the usual practice to use additional returns, which we generate on top of our guidance to build up a balance sheet, which is undisputedly the strongest one in the industry.

And this is what we are going to do also going forward. So, we didn't do a lot of result, let's call it, steering.

My auditor should not really listen to the call really. We didn't do a lot in recent quarters.

But on a year-on-year basis, and that's something we discussed a few times already, what we really appreciate is having predictable, stable, growing, constantly growing earnings. And if there's potential to strengthen the balance sheet a bit even more, independently if that we are the strongest already, then we do it.

And this is -- that was just the remark. And the normalized combined ratio is so much lower than the 82% guidance after 9 months that we thought, well, there is potential.

And we use that for being even more conservative going forward. And yes, I think that's all behind that.

So, nothing to worry about at all. The starting point for next year, that was your second question.

Now how would I look at that? We started with a normalized combined ratio, which was very low into this year, and then it increased following changes in business mix.

But now also going into fourth quarter, what we just discussed, maybe we increased also the bookings to be a bit more conservative such that we will approach the 82% from below, slightly below 82%, something like that would be my current expectation for the full year on the normalized combined ratio. And then if we look at the markets where we see, when it comes to pricing, a plateau right now, quite some loss activity on top of that, by the way.

Why should I assume any change in the profitability of our book? I don't.

So therefore, I think 82% is a good starting point going forward into 2025 as well. We've been growing our book.

So, 82% on the bigger book is probably something which I would look at when I start analyzing how our earnings potential in P&C Re would look like going forward.

I just wanted to maybe dig a little bit deeper on the casualty trends in the U.S. What are you guys seeing?

What's the kind of sedent experience has been? And in connection with that, how do you think about casualty reinsurance into 2025, how rational the market is and the competition?

And secondly, I just wanted to maybe get some of your views on the investment results into 2025, whether you've been able to take any advantage of the market volatility to perhaps put some trades to ensure higher rates and higher regular income into 2025?

Well, thank you. Casualty, my favorite topic, probably discussing that every single call.

It's a continuously difficult market in our view. So, the casualty prices we see in the market, I don't think they are adequate.

They still aren't, and they have not been for quite a number of years now. And I continue to be surprised why rates do not move up more than what they do.

So therefore, we continue to be very cautious in underwriting. On the reserving side, overall, I said it before, our reserves are very much on the safe side.

Reserve review is still ongoing. I wouldn't rule out pockets here and there where our actual as expected is a bit higher than where we would want to have it.

So therefore, for selected smaller parts, potentially, we will take some action. But in the greater things of our entire reserves overall, I would still continue to expect the runoff as expected of 5% positive reserve runoff.

So again, no worries in that regard. But yes, if I look into the reserves more deeply, then obviously, it's not plus 5% across the board everywhere in every single portfolio, independently how you're small, you cut it.

But then there is areas which are performing better and which are performing worse. And casualty is clearly one of those areas, which is a bit more tending to have higher actual versus expected, versus, for example, some of our property books, at least some portions of the casualty business.

Yes, so this is, I think, how we look at casualty. If I look into the market, and again, this is not something we see a lot right now.

But if I look into the market, I think recently, there has been more and more discussions about younger years as well. While in the past, it was more about the soft market years when everybody was worried about the reserve strength of the soft markets.

I think market-wide, the younger years are getting more and more attention now as well. And I think in the course of the reserve review, we'll also have to look into these younger years a bit more.

But again, altogether, a very stable situation, plus 5% reserve runoff is clearly the expectation also for the 5 year, even given the bigger size of our book. So, no concerns on our side when it comes to casualty.

So, some of my questions have been addressed, but 1 or 2. So one is on cat pricing.

You opened the call by saying that the cat market must reflect -- continue to reflect underlying risks and incentivize risk mitigation. Just following up on that, after these 2 hurricanes, which happened post Monte Carlo, do you think the market is in a little better position on cat?

Or you think that these events haven't really made as much impact? I know the impact hasn't been as much as feared, but how do you think this event is compared to where we were in Monte Carlo?

So that's the first thing. And then second question, actually was on a topic you already addressed a little bit, but the reserve strengthening, let's say, you're doing in 4Q, is it also likely to be going into next year?

Or is it just because now we are at 9 months, 80.4%, so we have the room and so we should only think of 4Q now? And just in line with that, I know the target of EUR 5 billion has been met, but this was way below or very different from market expectations.

So, could you also comment if the targets are more important or the market expectations when you think about using the balance sheet that Munich Re has on the reserve buffers and those things?

Well, thank you for the question. I have to apologize.

I forgot one of the question Ivan was asking. So, I start with that one, and then I'll cover yours one after the other.

And Ivan, your question was the investment result for 2025 and how we would look at that. And yes, you can see that the running yield has been going up quite a bit over this year.

And so, a lot of that is sustainable. So therefore, we are quite optimistic also going forward for the investment result.

What could be not sustainable in that number in that running yield? Well, certain elements are also driven by distribution, for example, from private equity or similar funds sometimes.

And there, it's a bit more volatile, a bit more open if it will continue again next year to the same extent. But generally, the running yield should continue.

We did realize some losses on fixed income during in the course of the year already, as you know. So, this strengthens also the running yield.

The more losses we take now, the higher the running yield will be in the future. And we are -- I would not exclude to do more in that regard in the fourth quarter now, in particular, if the result would continue to be very good, then we would clearly try to make sure that we benefit even more from the still high yields also in the future and then realize some more losses.

So, I think that was it on the investment result. Now on next question, which was the cut pricing, and I understood the question that if after the hurricanes now, the market is in a better shape.

I mean, I think the starting point for the answer would be that we would anyway expect the market to be on a plateau if we look at from a global perspective. But obviously, wherever a client is affected by recent events, this will be very much part of the conversation we have with our clients in the course of the renewals, be it 1/1 or then later 1/7 next year.

So, it will have somehow an impact. But generally, if I look from a more bird's eye view on what's going on and the prices globally, then I would expect us to be on a plateau right now and no significant further increases of the profitability going forward.

Reserve strengthening, to be very clear, we don't assume any reserve strengthening next year yet at this point. And this year, we do it opportunistically because after 3 quarters, we are just trading clearly ahead of our 82% guidance.

So, we just make use of that opportunity, as mentioned before, nothing to do with what I said on 2025 at all. And it would be so not Munich Re style to think about future reserve strengthening because clearly, the target is to have the safest possible reserve level at the end of this year.

And then obviously, there is no assumption that anything else should happen going forward. So therefore, a clear no to future reserve strengthening.

And then question was also then guidance for 2024, I think. And I think you differentiated between the EUR 5 billion target where we are now clearly outspoken that we will exceed it versus the market expectation.

And you're right, it's a no-brainer that we are going to exceed the EUR 5 billion, obviously. So already, if you take the run rate, 25% of the EUR 5 billion target and assume that to happen in the fourth quarter, then you would be significantly higher.

Now the run rate is probably too high because seasonality in the fourth quarter, there are higher major losses to be expected. There is a bit of a buildup of a loss component in the fourth quarter.

ERGO, there's also some negative quarterly volatility. So, the fourth quarter is also a bit lower in ERGO.

So, there are the good reasons why 25% of EUR 5 billion is clearly too high for Q4. And we could do some steering like realizing some losses.

But if you deduct all that, you would still end up expecting a result of being, for sure, a few hundred millions higher than EUR 5 billion, given where we currently stand. And I think you can do the math yourself because our result finally is not so volatile anyway.

And yes, so therefore, nothing changed really. And don't overinterpret when we say above EUR 5 billion, it does clearly not mean it's EUR 5 billion and EUR 1.

It means we are going to clearly exceed our EUR 5 billion target.

My first question was really to kind of focus on the year-end buyback situation because obviously, your solvency is kind of record highs. The balance sheet, as you say, is best-in-class.

I know you've indicated that you'll issue debt. I haven't seen much evidence of that at this point because your debt leverage ratio is very low versus peers.

When we do come to year-end, will you be addressing the stock of capital that you have? Because it's one thing to address the flow and another thing to address that stock, and particularly if you intend to issue debt over time, is that something that you'll look to execute on before year-end?

Or will you take that into account in any year-end buyback decisions? So that's my first question.

Secondly, and a few of my questions have been answered already, but I just wanted to ask about the expense ratio in P&C Re. We got 15.5% at 9 months.

I think you previously guided to a number there of 14% to 15%. I understand there's some profit commission type issues playing through that number.

But will that number revert back down to the target range over time? Or are we going to remain at that elevated level?

Yes, James, thank you. Yes, capital management, nothing new really.

The decisions will be taken in the first quarter only once we know the full year-end results. But obviously, our Solvency II ratio even strengthened in the last quarter.

So, no changes to what we said before. And let me just reconfirm that we are fully aware that the expectation is that we pay out more.

This makes a lot of sense given where we are with the capitalization and also with the earnings, how they develop. Having said that, we are always looking at capital repatriation as a multiyear journey.

So, you should never expect Munich Re to pay out, as you call it, the stock at once or reduce it significantly at once. But the stock and the flow both will be an integral part of our considerations when we assess how much to pay out next year.

And we will, of course, carefully think about, again, about the split between dividend and buyback. And the dividend is always something which we're looking at as something which is very stable and because we never reduced it for so many decades now that whatever we increase the dividend, it must be 1,000% safe that we never ever are going to reduce that number again.

While the buyback is a more flexible tool, which we could also opportunistically increase. But there also -- the history shows that whenever we increase the buyback, most of the times, it was also a sustainable increase.

So, this also has to be kept in mind when thinking about Munich Re's buyback strategy. And this is how we are going to look at that.

And obviously, when I say multi years, it will last into the next strategy phase when we are talking about Ambition 2025 plus end of next year, this Ambition 2025 phase ends. So, there will be a 1-year discussion of what we do now and then the more multiyear strategic discussion also when it comes to capital management has to then take place more long-term anyway also in the context of the next strategy.

So, this is how we look at that. And again, we are very, very much committed to give back capital.

And so, this didn't change at all. And yes, and then we'll take it from there in Q4, I would suggest.

Expense ratio, that's always a difficult number to comment on in our case. And the reason is very simple.

It's so dependent on the loss ratio. So, there are so many result dependent commissions and stuff like that, which could easily change the expense number quite a bit from one quarter to the other without having any meaningful impact on our meaningful statement about where our expenses really are or what our expense position really is.

So therefore, I would say, structurally, nothing really changed. Given the growth we have, obviously, our volume increased significantly, but it's a large part of our business, then the expenses also continue to increase, commissions follow the volume.

And on the admin side, obviously, we're looking for benefits from having a bit more scale. But all in all, I would say nothing really changing on the expense side.

So, all very much in line with the past.

Sorry, most of my questions have already been taken. But if I just look at your yearly January renewals disclosures that you've done historically, nat cat share of your P&C portfolio has moved up from, call it, 15% to about 19% as of the beginning of 2024.

Now it seems like the P&C Re portion of it stayed stable around like, I don't know, call it, 11%, 12%, but that GSI has moved up from roughly 4% to 7%. One question I'm wondering is, are you comfortable with that level going forward, just given the cat volatility throughout this year, which seems to be a decent amount coming from the GSI portfolio.

My second question is just trying to wrap my mind around Hurricane Milton losses. You're saying they're lower than Hurricane Helene losses, but based on what we've seen from the cat rating agencies, the number for Milton is much higher for the industry than Helene.

So, I'm just wondering maybe why that is? Is it more of a skew towards reinsurance versus the GSI portfolio?

Or is there some reinsurance around GSI? Just helpful with any other color that you could provide on that.

Sure. So first, nat cat again.

Yes, we feel comfortable with the exposure we have, given the pricing level where we currently are. So, this is an attractive environment to be in the cat space.

But as soon as the market would turn significantly, obviously, we would be willing to give up also significant portions of that book and of that business. As I mentioned before already, following also what's happening with climate change, and also this higher volatility you're mentioning or frequency, however you would call it.

Obviously, prices will have to follow, not only on the reinsurance side, but also on the primary insurance side. Otherwise, the entire industry would not be able to cover risks out of those perils.

And so therefore, I think the development over the last year was quite healthy. Prices moved up.

But I think depending on also how the development will be going forward, potentially there's need for more. We'll see.

Again, currently, we expect prices to be on a plateau level globally. But in areas where you have particularly high losses, it will be very much part of the conversation when it comes to the renewals.

But all in all, due to that mechanism and looking at our long-term profitability in cat business, we very much feel comfortable, by the way, not only in reinsurance and GSI. And also, I'm not sure to what extent I can confirm the numbers you were just referring to the split between GSI and P&C Re because both have been growing significantly.

And also, in P&C Re, we are expanding our cut share over the years. But there's also always also some currency movements in there.

So maybe there's also some distortion from that angle, I don't know. Milton versus Helene.

Indeed, Helene was an interesting event for us given that the split between GSI and reinsurance was roughly 50-50. And the reason for that was really the path Helene took.

Helene wasn't a Florida event in itself. It was an event which started in Florida, but then covered the Carolinas and went up into Georgia.

And there, obviously, our exposure is very much different compared to if you look at Florida only, in particular, also on the GSI side. And therefore, the difference between Helene and Milton is so significant because for Milton, we would expect the GSI claims to be significantly lower, very much significantly lower than what we have for Helene.

Just one question left from me. What's the discounting assumption that you're using there within that sort of thinking about 2025 82% run rate working off the '24 base?

And a peer was really clear that they've taken higher discounting versus if you benefit and building a stock essentially a reserve rather than showing it in earnings. Have you done the same as explicitly?

And can you quantify that amount if you have in '24?

Yes. So, in '24, so you're referring to the difference between discount benefit and IFIE cost, if you want the offset between the two.

And if you've been holding all of that back?

Yes, yes. Now, we don't hold back anything.

It's a relatively small number for us in '24 anyway. And if interest rate shifts are not too significant, it's also offsetting each other.

So therefore, I would not expect any major changes. Now if we would have a jump in interest rates of a percentage point or something, then obviously, we would have to speak about a time delay between the combined ratio reacting immediately while the IFIE would only react with a certain delay.

But if you look at smaller interest rate shifts, it's all pretty much stable. I wouldn't expect a big impact on the result from that.

Optically, obviously, the combined ratio would react somewhat if interest rates would be a bit higher or a bit lower because the discounting then changes. But again, the IFIE would also change.

the assumption so far when I was talking about, it was anyway no precise science when I said my starting point would be 82%, but my assumption is then, of course, always based on more or less the current interest rate environment. So, our more precise outlook calculations are only being done as we speak.

And as always, we currently assume that we are going to release our outlook then towards the end of the year. I think it's a week before Christmas or something, and we will be able to speak then in much greater detail about what we will expect to happen next year.

But it's a bit early for really going into those details.

The first question is on ERGO and the increase in the combined ratio guidance for the International and Germany business. I mean the issues in Germany have been well flagged and well known.

But I just wanted to understand, given the pricing environment and the underwriting actions you're taking, should we expect those combined ratios to come back down? Or do you expect it to be elevated in 2025?

And the second one, could you just maybe break down qualitatively what's driving the increase in solvency at Q3? Are there any sort of one-offs in there that we should think about?

Yes. ERGO combined ratios, I would differentiate between Germany and International.

Let's start with International. There, the increase is very much driven by the large losses in the third quarter and by the medical inflation in Spain.

Obviously, the large losses are short-term in nature. So, I would not expect them to be something to worry about going forward.

The medical inflation, our Spanish company, DKV Seguros is taking a significant amount of action in order to cope with that. So therefore, let's see how far that goes, but I'm quite optimistic that the decisive action they take will at least have some impact.

On the German side, this motor topic is a bit tricky. You do whatever you think in pricing, but then you have to be careful that the inflation is not again catching up with what you did in pricing and the entire market is struggling a bit.

I think what we do as measures here is really decisive and really, in a way, I wouldn't say extreme, but it's heavy action which is being taken there. But who knows how the market reacts, how volumes react, how really the inflation also develops going forward.

And these motor topics sometimes are more sticky than you would like them to be. So therefore, I'm a bit more cautious on that side.

And then the interest rate impact, which also drove the combined ratio up for ERGO Germany is also clearly something which has to be seen how it continues to develop. So maybe that gives you some color around how we currently think about the combined ratio development and maybe also going forward.

Again, the more precise guidance based on our bottom-up calculations, which we are currently doing will only be released close to Christmas then. Solvency II ratio, yes, exactly.

The Solvency II ratio, what was the driver? Operating performance.

So, the money we made in IFRS also shows up in the own funds in Solvency II. And then we had a very slight decrease in the solvency capital ratio even, but tiny, and this was FX-driven.

Congrats on the results. I just had one question mainly on cyber.

And I understand that you guys are pretty positive on the opportunity, but you pruned back some of your book in H1. And I'm just interested to hear if you expect more repositioning in the coming months or if there's still cases that you wish to address.

Well, cyber continues to be a very relevant line of business for us. And so no strategic changes to be expected on our side.

I think the one key point we always have been emphasizing is that terms and conditions needs to be the right ones. In particular, there's a war explosion-- cyber war exclusion, which we really want to see, and therefore, reduced volumes in the last few renewals wherever we weren't able to get a proper cyber war exclusion.

But other than that, we are really optimistic also going forward when it comes to cyber.

Actually 2, but they're very quick. One is Canada, how much do you think rates will rise there given that it was a big part of Q3?

And then the second is on deals. At the dinner, I keep going back to the dinner, that's all I remember.

There was a mention of potential deals to either lift ERGO or GSI, but they wouldn't necessarily move the needle much in terms of solvency. I just wondered if there's any -- what your current thinking is on that?

Can you repeat the first one? I'm not sure if I got the first one.

So, Canada cost EUR 0.5 billion in Q3 in terms of nat cat. And I just wondered how much pricing you think you'll get for that in January?

Yes. Well, that remains to be seen how the market reacts in Canada, but it's a market where we are not pessimistic that not over time, but it will be many years, of course, there is a fair chance to get back into a profitable state.

So, earn it back in a way over multiple years, of course. So, we are not pessimistic in that regard.

But for Canada, the amount of losses was very significant also in historic comparison. So, there you're right.

At least on the M&A side, so nothing new really this quarter to be mentioned. Going forward, yes, we would be open in ERGO and in GSI.

And yes, we would have the capital in place. So as soon as there would be a target where our profitability requirements would be met and we think there would be strategic fit for us, obviously, we would look into that.

And as anyway, all of the investment banks know that, wherever there's something available, they contact us and we regularly look into it. Now the amount of transactions coming out of that is not huge historically.

Also, given the fact that we are scrutinizing the targets quite a bit when it comes to how much profitability can we expect going forward from those. But yes, generally, we're very open and wherever it makes sense, we would be very happy to expand our commercial proposition by M&A as well.

Yes. Thank you, Moritz.

Nothing to add from my side. Thank you, Christoph, and thanks to all of you for your participation and questions.

Further questions, very happy to answer after the call, as always, and hope to see you all soon. Have a nice remaining day.

Bye-bye.