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Good morning, everybody and welcome to the SCOR Group first half of 2019 results call. Can I please ask you to consider the disclaimer on Page 2 of the presentation, which indicates that the financial results for the first half of 2019 included in this presentation have been subject to the completion of a limited review by SCOR’s independent auditors.

With this, I would like to give the floor to Mr. Denis Kessler, CEO and Chairman of the SCOR Group who is joined on this call by the ComEx team.

Denis?

Thank you, Ian and good morning everyone. SCOR delivered a strong performance in the first half of 2019 successfully combining strong growth, excellent profitability and robust solvency.

SCOR has continued to expand and deepened its franchise, writing more than €8 billion of gross written premiums in H1 2019. This is an increase of 2.6% at constant exchange rates driven by excellent growth of SCOR Global P&C of 10.4% resulting from successful renewals in an improving rating environment.

The SCOR Global Life growth of minus 2.6% at constant exchange rates reflects financial solutions deals renewing its fees and we told you about this already in Q1. Add this renewed premium, on a like-for-like basis with last year, Global Life growth would stand at 3.8%, plus 3.8% and the group overall growth would reach 6.5% in constant exchange rates.

The profitability is excellent. With a net income of €286 million year-to-date at the end of H1 2019 translating into a return on equity of 9.8% or 908 basis points over the 5-year risk free rates and this is well above the Vision in Action profitability target of 800 basis points over risk free.

The technical profitability of the business engines is strong with an excellent P&C combined ratio of 93.7% better than an assumptions of 95% to 96%, a strong Life technical margin of 7.2% and a solid return on invested assets of 2.8%. At the same time, the solvency position is strong at 212% in the upper part of the 185% to 220% optimal range of the group’s solvency scale, with capital generation helping to offset the impacts of market movements within the quarter, particularly the decrease in interest rates.

Moving on to Slide 4, this excellent start to 2019 brings a fitting and successful close to Vision in Action, the plan we launched 3 years ago and that ended at the end of June. Across the course of the plan, the group has had to face many headwinds.

You know it, we have had the volatility of the heavy cat loads in 2017 and 2018, while the P&C market environment has been soft, but here we are now becoming more optimistic. We have had a low yield environment.

We have had to face regulatory shocks such as the Ogden rate change and also geopolitical uncertainties such as Brexit. We have had to face the shock of the U.S.

tax reform. The plan was called Vision in Action.

In the face of these shocks, we did not standby, we acted. We had a robust capital shield with retrocession protection to help absorb the cat losses.

We dealt with the U.S. tax reform by swiftly setting up the structures to ensure we have a strong capital efficient model going forward.

We created a new direct insurance company in France to cope with a hard Brexit, which is likely to be the case. All the while focusing up as a consistent application of the strategic cornerstones to profitably expand and deepen the franchise.

The actions resulted in the successful delivery of the two targets of the group on a normalized basis over the course of Vision in Action. With an average normalized ROE of 9.5% or 876 basis points of a risk free and an average solvency ratio of 219% is the upper part of the solvency scale optimal range.

The successful delivery of Vision in Action has created considerable value for our shareholders. Over the course of the plan, total shareholder return has been 65% plus dividends to investors.

You can expect us to emphasize value creation when we announced a new plan at the IR Day in early September, September 4 exactly. I will now hand over to Mark for the details of the H1 financials.

Mark, the floor is yours.

Thank you, Denis and good morning everyone. So, let’s begin on Slide 5.

I will walk you through the financial highlights of the first half of the year. In H1 2019, SCOR underwrote €8 billion of gross written premiums, representing a 6.3% increase over 2018 at current exchange rates or 2.6% at constant exchange rates.

SCOR Global P&C grew at 13.9% and SCOR Global Life by 1.2% both at current exchange rates. And SCOR Global P&C delivers a strong net combined ratio at 93%, including a cat ratio of 5%.

On a normalized basis, the P&C combined ratio stands at 95.5%, in line with the Vision in Action assumption. The Life technical margin is elevated at 7%, slightly above the Vision in Action assumption particularly due to the 0.4 percentage point of positive impact for financial solution deals being renewed in the first half of 2019 as fee business.

SCOR Global Investments delivered a return on invested assets of 2.8%, supported by a strong recurring yield at 2.6%. Overall, SCOR’s net income for H1 2019 stands at €286 million, up 9.2% compared to 2018.

This translates into a return on equity of 9.8% and this is above our Vision in Action profitability target of 800 basis points above the 5-year average risk free rates. Denis already talked about the solvency position and it remains strong at 212% at the end of H1 and in the upper part of our optimal range in our solvency scale with market movement in interest rates and the dividend accrual offsetting the capital generation in the first half of the year.

Going to Page 7, SCOR has seen strong book value growth over the first half and after dividend payments, shareholders’ equity increased by 4.5% compared to fiscal year 2018 to €6.1 billion and this is largely driven by net income of €286 million recorded in the first half of the year. This corresponds to a book value of €32.59 per share and the financial leverage stands at 26% decreasing by 1.1 percentage points compared to the position at year end December 31, 2018 and this is broadly in line with Vision in Action assumptions.

So, let’s move on to Page 8. SCOR generated €33 million of operating cash flow in the first half of 2019.

SCOR Global P&C’s cash flows reflect the claims payments from 2018 nat cat events and SCOR Global Life cash flow reflects volatility of claim payments and seasonality in client and tax settlements. Overall, the total liquidity of the group is strong and stood at €1.7 billion at June 30.

Let me now hand over to Jean-Paul who will present the result of SCOR Global P&C.

Thank you, Mark. SCOR Global P&C has achieved a premium growth of 10.4% at constant rate of exchange for the first half on the back of strong renewals in the U.S.

during the second half of 2018 and globally during the first half of 2019. We expect the premium to normalize during the rest of the year and to land in the upper part of the 5% to 8% range of Vision in Action.

From a profitability point of view, we had a good second quarter yielding a 93.7% net combined ratio for the first half of 2019. This is decomposed as a 5.2% cat ratio for the first half made of 6.5% ratio for Q1 stemming from 2018 loss creep and 4.1% cat ratio in Q2 stemming from the Q2 events in 2019 such as the U.S.

tornadoes, floods, floods in Brazil, storms in Europe. We also experienced further loss deterioration on Jebi for an additional €33 million gross loss to SCOR taking the event as a market loss in $12 billion and $15 billion.

However, the loss is now into our retrocession protections and the net impact to SCOR is nil. We estimate our retrocessional protection to be active up to a market loss for Jebi of about $22 billion market loss.

We also experienced additional 2018 loss situation from typhoon Trami and from the Kuwait floods. However, these losses were offset by loss improvements from the 2018 California wildfires.

As a result, the net impact to SCOR of the 2018 events for the second quarter was nil. The normalized net combined ratio stands at 95.5% for the first half in line with the 95% to 96% assumption of Vision in Action.

If you turn to Slide 10, during the June and July renewals the SCOR Global P&C premium grew 6.2% at contract rate of exchange. The growth year-to-date stands at 10.2% at the same cost rate of exchange.

Pricing improved 3.8% at these renewals for an overall pricing improvement year-to-date of 1.7%. We currently see an acceleration of primary insurance rate hardening, especially in the U.S., following the shrinkage of limits deployed by lead insurance companies and a struggle for brokers to complete placements.

From a reinsurance point of view, the market is firming more slowly with decreasing commissions on a number of casualty proportional treaties, significant rate online increases on property cat placements and small commission decreases on proportional property treaties. In the U.S., we did not grow the cat portfolio despite the 15% to 25% rate online increases achieved on four specific programs, because these increases barely matched our increased view of risk coming from increases in loss adjustment expenses.

That’s also an inflation. Similarly on the rest of our portfolio, we kept a stable portfolio as our share increase last year had anticipated rate increases that only materialized this year.

As a result, we took some management actions to curtail the portfolio where increases were insufficient and increase our share pricing met our expectation. Other areas of note where we grew are Latin America where we grew 21% on the back of strong price increases in Puerto Rico, Peru and Chile and Australia where we grew on one of our strategic clients.

Having now renewed over 95% of our yearly portfolio, we anticipate that 2020 renewal season optimistically with expected continued hardening of primary conditions and an accelerated firming of reinsurance conditions. And now I hand over to Paolo on for Life.

Thank you, Jean-Paul. First of all, I am proud to say that the teams at SCOR Global Life successfully delivered Vision in Action.

We have achieved or exceeded our assumptions, both in terms of growth and profitability. The SCOR Global Life has expanded its franchise and client recognition of the strength of our proposition is strong across all geographies.

We will provide more details on our achievement in our strategy going forward at the IR Day in September. If we go back to the results in the first half of 2019, we have recorded gross written premiums of €4.6 billion.

This is an increase of 1.2% at current exchange and as already mentioned a slight decline of 2.6% at constant exchange rate compared to the same period last year. As in Q1 2019, this variation is largely driven by certain financial solution deals, which have been renewed as fee business rather than as premiums in the first half of 2019.

As you may remember on these deals, we are now recording similar amount of profit and no headline premiums. On appendix Page 29 of the presentation, you will find detailed numbers.

Excluding these deals, we have grown by 3.8% in constant exchange rates driven by positive business growth in North America and in Asia. This premium growth is in line with the Vision in Action assumption of 5% to 6% over the cycle and translates for 2019 in an expected normalized growth rate of 2% to 4%.

On the profitability side, the net technical result stands at €304 million. The new business underwritten continues to be above the group ROE target.

The in-force performance is solid with U.S. mortality claims roughly €130 million higher than in the same period in 2018 balanced by active portfolio management and a strong reserve position.

The technical margin stands at 7.2% for the first 6 months of 2019 and again the renewal of the financial solution deals as fee business adds 40 basis points to this metric. As mentioned at the beginning of my presentation, on these deals, we are now recording similar level of profit on lower headline premiums.

Well, now I turn it over to François for details on our Investment performance.

Thank you, Paolo. Moving on to Slide 12, SCOR’s total investment portfolio reaches €27.5 billion at the end of June with an invested assets portfolio of €19.5 billion compared to €19.6 billion at the end of March.

SCOR Global Investments successfully completed Vision in Action with an average return on invested assets of 3.1% of the plan, in near top end of the initial 2.5%, 3.2% range. This was achieved in spite of a challenging financial and economic environment over the past 3 years.

The portfolio positioning reflects the current environment. Liquidity stands temporarily at 8% of the invested assets.

The share of corporate bond has been reduced by 4 points to reach 44% and the fixed income portfolio remains off very high quality with a stable average rating of A+ and the duration of 3.8 years and highly liquid with financial cash flows of €6.6 billion expected to emerge from the investment portfolio over the next few years. Investment income on invested assets stands at €309 million in H1 2019 generating a return on invested assets of 2.8%.

This performance is supported by a strong income yield, which stand at 2.6% in the first half of this year. Our theoretical reinvestment yield stand at 2.2% at the end of June reflecting the global decrease of interest rate since the beginning of the year.

Indeed, our reinvestment rate stood at 2.9% at the end of December 2018 and 2.5% at the end of March. Under current market condition, we maintained our expectation of an annual return on invested assets in the 2.7% to 3% range for the full year of 2019 supported by capital gains on mature real estate assets to be taken in the second half of the year.

With this, I will hand it over to Ian Kelly for the conclusion of this presentation.

Thank you, François. On Page 13, you will find the next scheduled event starting on September 4 with our Investor Day to be held here in Paris.

As well as the conferences, which we are planning to attend for the remainder of 2019. So with this, we can start the Q&A session.

Thank you.

Hi, there. First question on you flagged the greater momentum in particular in U.S.

primary maybe you could just outline how opportunities that generates for SCOR? Is this to write more proportional business in new lines or I mean obviously you didn’t grow much the half year U.S.

renewals, but just like how do you think the harder primary market translates into opportunities for SCOR? Secondly on life claims, thanks for flagging the higher U.S.

claims, I am not quite sure what to do with the information? Are you flagging it and saying, we had to work really hard to combat those extra claims and by the way there might not be the ability to do that in future quarters or as interpreted, is there still plenty of room left I suppose to combat if those elevated claims continue?

Thanks, Andrew. Certainly, on your first question, I am going to give the floor to Jean-Paul, but it’s extraordinary to see the change of mood on the U.S.

market. I mean we are not the only one to say that when you analyze the news flow.

We were expecting this turn earlier to tell you the truth when we launched Vision in Actions few years ago. We were expecting the cycle to turn, let’s say, 1 or 2 years ago.

This was not really the case. It stabilizes, but now it’s stabilized but now there are lots of signs of firming up, hardening market and as the primary side as you said, but also on the reinsurance side.

So it’s quite a change and it’s only took place in 2019, but we see the renewals after renewals. And it’s true that this is a radical change of the environment.

We believe it is going to go on for 2020, but we will certainly expand more on those issues when we present the new plan. So you are absolutely right to say it is a change I would say not of your mood, but I would say that the market is a new orientation.

Jean-Paul, can you see how we benefit from those changes?

Yes. We are a big proportional writer in the U.S.

both on casualty and on property. What we are seeing on casualty is on the price increases, there has been – have been significant.

And let’s say last year they were probably below the loss inflation that we were seeing coming through the various losses on casualty. This year we think they are above the loss inflation, so it’s positive.

And additionally, the reinsurance commissions are coming down on many treaties. So overall we feel fairly positive on the casualty side.

On the property side, the rate increases are very significant, as a result of actions by some of the market leaders in the U.S. and in London.

We see price increases that are double-digit and sometimes very high double-digit. On the reinsurance conditions though, the commissions have really not moved that much because of oversupply of capacity and so we’ve been very cautious on those, pushing for larger variations of commissions and we didn’t achieve them, we just kept our shares constant.

This explains sort of the stability of our portfolio during this renewal. Going forward, we expect the firming of the reinsurance conditions to continue and the commissions to continue to come down.

And then what happens, we will probably increase our shares on programs that we view as profitable. So overall, we remain very optimistic 2020.

Sorry go ahead. Go ahead, Andrew.

So, just clarify – Jean-Paul, you described yourself as a significant rise of U.S. casualty, but you are not really.

I mean you have been underweight U.S. casualty truly for some time unless I’m...

Well, yes, underweight relative to our peers, but today we write about €800 million of U.S. casualty, so we are definitely underweight compared to our peers but the portfolio has been growing over the last 3, 4 years.

Paolo?

Yes, on the €130 million, Andrew, we did experience an unusual degree of volatility in the first 6 months. So I thought it was our responsibility to flag it and make sure that we put it in context on the comparative numbers that we are showing on the disclosure.

We are going to add some more color to the U.S. book as we go given the size of the U.S.

book for SCOR and we can take on this subject at the Investor Day and maybe discuss it then.

Sorry, I am just trying to understand are you flagging something that we should think about for future periods or?

No, I think we remain where – we remain confident as we were in the past. We have extended optionality in the book and the book is very well reserved, but the degree of volatility we experienced in the first 6 months we thought was sufficiently material to be flagged in our disclosures.

But we remain with the same degree of confidence that we had in the past around both the optionality and the way the book has been reserved in the past.

Okay, thanks.

Thanks, Andrew. Let’s go to next question please.

Hi, couple of questions. One is just on the, I guess on the reinvestment yield, you are flagging it 2.2% and that’s not surprising given what’s happened to yield recently.

I guess you have confirmed 2.73% for this year. I guess when you are thinking about future years do you think similar run-rate for this year would still feel is achievable?

So that’s the first question. And then the second question just on the price increases you have seen year-to-date, when do you think we start to see these working through into underlying margins?

Thank you.

François?

So maybe on the first question, so that’s true that we observed since the end of last year, a significant drop everywhere in the world, especially in the U.S. and in the Eurozone, a significant drop in interest rate.

Just as a reminder, the 10-year treasuries, was at 3.2%, in November and is close to 2% today. So, what does it mean in practice?

I maintain my expectation for the full year 2019 of an income yield around 2.5%, so no effect at this stage. Having said this, the fixed income portfolio today is protected by its duration, so which mean that there will be a lag before we see the impact on the income yield, but this impact if those market conditions are the same in the future will progressively materialize in the income yield over the next 3 years.

So we will give you a full update early September, but I maintain the same expectation for the full year 2019 at 2.5% at this stage.

And what was the second question, Kamran?

The second question is just you have had 1.7 points of price improvement year-to-date in P&C. It’s just when – how long do you think it is before we start see this working through into underlying margins or improvement in normalized margins?

We have taken a cautious view this year. I think in 2018 when clients were telling us they are going to see 10% rate increase on their book, we probably gave them credit for 8% and in reality they probably achieved something like 4%.

So, this year when clients tell us they are to going to achieve 12%, we have probably given credit for half of that. So I think we thought that we were probably too optimistic last year and being more prudent this year.

So, in the combined ratio that we are reserving for, there is some conservatism on the amount of price increases that will flow through the book and so we are waiting for the full year to develop before we give them full credit. In addition to this, we have taken a revised view of a number of perils such as Japanese typhoon, U.S.

hurricane in Florida, U.S. wildfire and other risks.

So that’s also reflected in the higher loss cost. So, again as we see portfolio developing throughout the year and we see that maybe we have been too conservative.

We may revise those views, but that will not flow until next year.

Thanks very much.

Thanks. We can go to next question.

Yes, good morning. Thank you very much.

So just on the similar two topics please. Firstly, Jean-Paul, you mentioned the more conservative view on wildfires and all these perils, but equally in the same breath, you are releasing lot of positive development from the California wildfires.

So could you just reemphasize is it just being extra conservative, rebuilding the reserves maybe and is Ogden affecting any of your thinking, please? So that’s just, if you don’t mind, one area of question.

The second one is for the investment income, there has been – I mean you have increased liquidity you sold maybe corporate bonds of say €700 million. Duration is reduced.

What are these indications? I mean reduced duration, François, usually is in anticipation of interest rate increases.

Is it just all these measures are just kind of resetting before the next planned, so you want to manage the risk a bit better or how should we understand the actions in the quarter? Thank you very much.

Maybe we start by Jean-Paul.

Yes, thank you. On the wildfire, there is two different aspects.

One is our view of risk, I would say on the pricing going forward. And there we review our – we have revised our views and is taking a much more pessimistic view of the risk.

With the climate change, we view this risk as being much more frequent than in the past and that’s reflected in our pricing. In terms of the improvement of the loss estimates for the Q2, this is basically a reallocation of loss between the Camp fire and the Woolsey fire and just the way the retrocession works, this results in the net improvement this quarter overall.

On your question for Ogden, we estimate this to have a net impact to SCOR, after tax of about €14 million and 1-4, €14 million.

€14 million. And this is yet to come or…

I’m sorry.

This is yet to come, this Ogden.

Yet to come, yes.

On your second question on what we did during the quarter, so that’s true that global economic growth forecast has been revised downward by all forecasters since the beginning of the year and especially for Europe, U.S. and Asia.

The inflation elements contain even in the U.S. but some bankers have been quick to react and have adopted a dovish stance, so which means that the probability of slowing environment seems to be back for a while.

So in this context, we have started to manage actively our credit portfolio, so which means in practice if you look at all the figures, we improved the average exposure of SCOR to credit, so which mean a reduction by 4 points. And we also improved the quality of this portfolio.

So, the translation of this active management of the corporate bond portfolio in Q2 translate into a voluntary reduction of this exposure and part of the proceeds are temporarily kept in cash pending further investment and I will provide details of future investment strategy early September with the presentation of the next strategic plan.

Okay, thank you very much.

Thanks Vinit. Let’s go for next question.

Hello gentlemen. Thank you very much.

Paolo, just to come back to what you said to Andrew, could you clarify please, the €130 million you phrased that with reference to first half last year, what would the figure be relative to an expected loss rates or a neutral benchmark? I can’t remember where the first half was – last year was normal or not.

So that’s question one. And then question two, again, I appreciate you’re not giving us detail on the Solvency II ratio, but given that there’s lot of moving parts in the numerator and the denominator, could you just tell us in the first half of this year, how much the SCR has changed?

I think it was €4.2 billion at the beginning of the year. So has that part of the ratio gone up or down and could you give us a guide on that?

Yes, William, we did use the comparative to prior year because we’re not really disclosing a plan or an expected overall at SCOR. So we thought that was the best way to flag the volatility was a comparative to prior year.

In terms of our internal benchmark, clearly, the 2 quarters have been above our expectations and we have taken action in terms of rate increase to compensate that effect.

So in a sense, the €130 million understates the issue, specifically in that portfolio because it was already above expectations this time last year?

I’m not sure I would use the word understate. It’s just a different benchmark.

Okay, got it. Thanks.

Frieder?

So your question was whether the SCR, how that developed during the first 2 quarters, it’s significantly up mainly because of economic movements, the decline in yield curves, especially U.S. dollar interest rates mechanically drives the SCR up because of long-term U.S.

dollar-denominated exposures which are then discounted at a lower rate, that increases capital requirement. And there was also some growth because of business growth operating.

So in total, the SCR is up by – it’s something in the range of about 10% compared to 1st of January.

That’s great Frieder. Thank you, Frieder.

Thanks a lot.

Thanks Will. Let’s touch the next question please.

Hello. Good morning.

Two from me, please. So firstly, the normalized combined ratio is running at the midpoint of the range at the first half stage.

Is that a fair reflection of the underlying profitability of the book right now? Are there any unusual attritional losses in that?

I’m just trying to think about what’s the right starting point for the new plan. Secondly, on the casualty book, so it’s interesting to hear you’re a bit more optimistic.

I mean my sense from you guys that you were getting a bit more interested when reinvestment rates are obviously much higher, 2.9% at the start of the year. It surprises me a little bit you are still a bit more optimistic with yields where they are.

So question is casualty pricing really that good and where is pricing versus loss cost inflation?

Paolo?

Yes, on your first question, I think as a reminder, we have changed the cat ratio from 6% to 7% at the beginning of 2019, so in effect when we kept the target combined ratio between 95% and 96% we implicitly took into account a 1 point improvement on the attritional. So that’s the first point.

So when you say it’s within the range but high, you should take into account that the cat ratio that we’re adding to this is no longer a 6% but 7%. In terms of pricing, I think, I explained that we – it’s possible that our views right now are a bit conservative.

I think we feel like we are better positioned to just let the portfolio develop and make sure the rate increases that we’re seeing punctually at different renewals are actually flowing through the rest of the book and that usually takes 6 months to 12 months to really start appearing. On your question about casualty, again, it’s a more question of successful and successive rate increases.

We start seeing rate increases on casualty in 2018. We’re seeing this being compounded in 2019 and accelerating.

On the other hand, you’re right that the rate of inflation seems to be going down, that the loss costs are going up. But right now we feel that the rate increases we’re seeing are basically more than compensating that and yielding a net positive.

It’s not all lines of business. The market is very fragmented.

It’s different behaviors between D&O, E&O, umbrella, primary, commercial auto. So we’re focusing on the segments where we see these positive improvements

And just to follow-up on the first question, I appreciate that the cat ratio went up, but just thinking about where we are today in the midpoint of this range, there’s nothing unusual that we should be thinking about that as a fair reflection of the sort of underlying profitability of the book at the moment?

No, I mean we’ve had some large man-made losses this quarter. A large refinery loss in Philadelphia, some mining losses, a little bit of further deterioration on the Boeing loss.

So those were the main events of this quarter. But I’d say it’s still within expectations.

Okay. Thank you.

Thanks, Jonny. Let’s go to next question please.

Yes, hi. Thanks and morning everyone.

My first question just comes back to the June and July rate increases and I’m still struggling to square things up a little bit here. I think you disclosed your pricing number gross of remodeling and loss costs.

So is it possible to just give us that – give us what the impact would have been or give us some form of steer at least, what the impact would have been net of remodeling of loss costs at June and July renewals? So that’s number one.

And number 2, you’re talking about price improvements in the primary space. Is it possible to just give a bit of color about how you’re thinking about your own primary business units in the context of this, I guess Lloyd’s and SBF?

Okay. I’ll answer the first part of the question and then I’ll hand to Laurent to answer the second part.

On the sort of estimated conservatism, we’ve included in the underwriting ratio, I can give you an estimate for Florida. We basically estimate that our revised view of loss costs has added about 5 points of loss ratio.

I think for the other programs, it really varies depending on what geographical location they’re in, if there’s a lot of wildfire or not, so it varies, just to give you an idea on Florida. I’ll let Laurent answer.

Is it possible to say anything at the aggregate level because obviously it’s quite difficult to sort of take that 5 points on Florida and square it up with the 3.8% on aggregate?

The overall U.S. book from a pricing point of view improved about 7% and then we estimate our revised view of modeling probably adds overall maybe 2 points to 2.5 points to that.

Okay, okay, great. Thank you.

On what we see on the primary market, so maybe first of all to come back to Andrew’s question on the U.S. I mean the U.S.

markets on the insurance side renews really up till 1st of July, so we’ve done 90%, if not more of the U.S. market right now.

And as Jean-Paul said, we really see double-digit rate increases on large commercial [indiscernible] risk that’s property and casualty driven so the rate increases are pretty high. The second thing that is very beneficial is the restructuring of those programs, so we see retentions being significantly increased and we see the reshaping of terms and conditions impacting the overall economy.

So that’s the first point. We see lot of turmoil in the U.S.

in particular on some of our competitor’s risk appetite, in particular, large groups and risk appetite changing. Some of it is really knee-jerk reaction to claims activity, but for us, I mean our risk appetite has been very stable and I’m really speaking here for SCOR business Solutions has been very stable for the past 5 years to 10 years.

We didn’t grow so much. We grew steadily, so that market situation is actually quite favorable and we make, let’s say, quite a difference there.

So the rate increases should tail off I guess in the rest of the year as the Europe and APAC are going to have a bigger share of our business on insurance and there the rate increases I guess are a bit lower than what we’ve seen in the U.S. So that’s the first answer on SCOR Solutions in the U.S.

Now on Lloyd’s, first of all, it’s still linked to the U.S. We see huge opportunities for us as the binders of businesses at Lloyd’s are really being restructured.

So our U.S. program business – the local U.S.

program business is based in Chicago and New York, seeing huge inflow of business because number of MGAs are nervous with Lloyd’s and the turmoil at Lloyd’s is benefiting us in our local platforms. So we see a good flow of business there.

And here again the rate increases are positive so there is very good commercial traction. And as far as Lloyd’s is concerned for our syndicate SCOR channel, here we continue our refocus on specialty classes, so political risks, environmental liability, cyber to a smaller extent.

And we see Lloyd’s continuing to put pressure on the market. And there are really kind of 2 messages at the moment at Lloyd’s, the longer vision, which is very aspirational and very growth driven.

The short-term one is clearly a pressure. We expect the SBF season to be a tough one and business plans to be hard pushed by those as well.

So we would not grow so much in channel. The focus there is very explicitly profitability of the group.

Okay. Thanks Sami.

Let’s go to next question please.

Guys good morning, everybody. I have two questions on the investment side.

First is on your reduction in corporate bonds by 4 percentage points. I was surprised to see that this only turned out in €9 million of realized gains on the bonds.

And so the question is whether there were other effects offsetting this? I would have expected as you reduce your corporate bond exposure significantly in the last quarter that the realized gains should turn out to be higher.

And then secondly on unrealized gains on equities in Q2, I realized that there was a decline and you have now given a negative unrealized gains number for equities despite having a slightly positive equities market in Q2. And could you also comment on the drivers there?

So on the – maybe on the second part, just the evolution of that our equity portfolio is mainly invested in convertible bonds and there are few co-investments that are listed and that’s the evolution of one line specifically on this portfolio. On your first question on corporate bond, so that was more a tactical move that we did.

If you look at all the details in the appendices of the presentation, most of what we did was to reduce a little bit of our exposure to BBB issuers and our yield issuers during the quarter, so which means that the amount of realized capital gain was not the objective and is limited. The good news of the decrease of interest rate is that as you can see also in the appendix, since the beginning of the year, we have almost an increase by €600 million of the annualized gain on the fixed income portfolio which benefits to the group.

Again, I will give you a full update on what we’re going to do over the next few years, given the current and I would say, new economic environment.

Okay. Thanks.

Thanks Frank. The next question please.

Hi, good morning everybody. Two questions please.

Just on the ceding commissions that you mentioned on one of the questions earlier on. Could you just elaborate a little bit about why the ceding commissions are trending down on casualty but not so much on the cat side of the portfolio, please in the U.S.?

And secondly on the reinvestment yield, so the 2.2%, obviously, you have the U.S. Treasuries around the 2% level.

When it comes to Europe though, the reinvestment rates are far lower than that. Corporate bonds, in particular seeing spread narrowing such that we’re sort of maybe around 50 basis points on the single A, something like that.

Could you just talk a little bit about the risk-adjusted returns on the capital that you’re getting for the returns in corporate bonds relative to other asset classes? And does there come a point at some stage, certainly in Europe, at which it doesn’t make any sense to buy any corporate bonds at all, but you need to start moving into say some real or even more into [indiscernible] assets for example?

So, good point on the reinvestment yield. So just as a reminder, what we call reinvestment yield, that’s the market yield of the portfolio, the last day of the quarter.

So if we deploy €1 or $1 marginally in the portfolio with the same asset allocation, that would be the new book yield of this marginal euro or dollar invested. So again with the mix of currency, we’ve got the average theoretical reinvestment yield at the end of the quarter is 2.2%.

We have more than 50% of the portfolio invested in dollar or reinvestment yield is at 2.8% at the end of June compared to 2.1% in euro at the end of June. Again, for let’s say our new target asset allocation and again, given the current economic assumption and I’ll just wait a few weeks, I will disclose this early September.

On the question on commission, I think the market dynamics on casualty and property are different. There’s still a lot of reinsurance providing proportional capacity for property programs and as a result the brokers are able to keep commissions relatively stable.

I think on the casualty side, especially on lines of business where the loss cost has been increasing, there’s less abundance of capacity and reinsurers are better able to push through overall improvements, not just the price increases.

Okay. Could I just clarify, I’m not sure I got those numbers down correctly, but you’re saying the new money yields in the U.S.

was 2.8% at end June. In Europe, it’s 2.1% but I think you said the mix is roughly 50% U.S.

So I don’t quite see how that gets you to 2.2%?

Yes. Because if we look at the other currencies, in sterling, so again, if you want the split of our portfolio per currency, so the portfolio at the end of June is invested, again it’s not a bet, it’s just a pure – the congruency between assets and liabilities.

But the portfolio is invested 49% in dollar, only 28% in euro, 7% in GBP, 4% in Canadian dollar and the rest in other currencies. So in GBP our reinvestments rate is 1.4% and in other currencies it’s 1%, so it’s coming from, let’s say – the 1% is coming from a small part of the portfolio, let’s say, on non-core currencies

I see, I see. And it still makes sense to buy single A corporate bonds in Europe, does it?

If you look at the amount of liquidity that we’ve got at the end of June in your portfolio, which are your point of view, it start to be expensive.

So what do you buy instead if you can’t buy European corporate bonds?

Again, wait a few weeks, early September to have the target asset allocation.

Okay, okay. Thank you very much.

Okay. Thanks James.

Are there any further questions?

Hello, can you hear me.

Sure, please go ahead with your question.

Yes, sorry. It’s Vikram from SocGen using my colleague’s phone line.

I just got cut out. I’ve got just one question and that’s on Solvency II ratio.

I appreciate you’ve already touched upon the topic a bit with the business growth and lower interest rates impacting the SCR. But with the higher liquidity, lower credit risk, tighter spreads and lower than expected cat impact in second quarter, I am a touch surprised the figure of 212%.

Just wondered if you can shed some more light on what drove the decline and if there is any impact from U.S. mortality assumption or experience changes?

Thank you.

So the biggest driver was declining yield yields in particular U.S. yields that’s worth about 5 percentage points, plus or minus of decline in solvency ratio and then we added a quarterly accrual of our planned dividend as in previous quarters, that’s worth about 2 percentage points that gets you to 12%.

There was no particular impact from U.S. mortality.

There weren’t any significant assumption changes. There are pluses and minus.

We have operating capital generation, new business, claims experienced, this all averages out and compensates the impact – sorry, the growth in SCR from the business growth outside of financial market movements. And that in total is about neutral on the solvency ratio.

Okay. Thank you very much.

Okay. Thanks very much Vikram.

Are there any further questions?

Okay. So thank you very much for attending the conference call.

Please don’t hesitate to give us a call if you need any further information. For those who can’t attend, we’ll be holding the analyst roundtable at various European offices later today, but that’s at 5:00 PM UK time.

And I’ll just hand back to Denis for closing remarks.

Thank you, Ian, and thank you all of you for your attention. I would like to wish you a good summer break.

I think we all need it. Of course, those of course will take some vacation and we’re all looking forward to the presentation of our new strategic plan.

The name of it is quantum leap on September 4 during IR Day in Paris and you will have further answers to your absolutely legitimate questions. But you will have to wait a little bit – more than a month and you would get the full details of the new plans that will covers the next years to come.

So thank you very much, and until your summer break. Bye-bye.