Swiss Re AG

Philippe Brahin - Head of Investor Relations David Cole - CFO

Guilhem Horvath - Exane BNP Paribas Edward Morris - JP Morgan Daniel Bischof - Baader Helvea Kamran Hossain - RBC Vinit Malhotra - Mediobanca Thomas Seidl - Sanford Bernstein Jonny Urwin - UBS William Hawkins - KBW Frank Kopfinger - Deutsche Bank Andrew Ritchie - Autonomous Thomas Fossard - HSBC

Thank you very much. Good morning or good afternoon, everybody, and welcome to First Quarter Results Conference Call.

I am here today with Philippe Brahin, as you all know, our Head of Investor Relations. Let me start with a few remarks on the key figures we published this morning under our adjusted format and scope.

Swiss Re started the year with a solid first quarter with a net income of $656 million. All business units contributed positively to this result.

P&C Re [ph] reported an ROE of 10.8% despite impact of cyclone Debbie. Our reserves strength remained intact.

We experienced positive prior year development across all lines of business in all regions. To maintain our underwriting discipline and ongoing difficulty [indiscernible] environment, premium volume on our April yield was down 2% and our year-do-date risk adjusted price quality remained at 101%.

Now we fully maintained this track record of good performance with an ROE of 11.6%. Corporate solutions also report solid results with an ROE of 10.1%.

Life Capital delivered a strong cash generation of $336 million. As expected, the large one-off realized gains in Q1 2016 do not repeat this quarter and an ROE of Life Capital with 3.9% for the quarter.

The Group also benefit from the strong contribution, stable contribution of our investment portfolio with an ROI of 3.4% and a relatively stable running yield of 2.9%. And finally our 2017 Group SST ratio increased slightly, just slightly up to 262% and remains comfortably above our respected ability level of 220%.

Our 2017 ratio reflects the previously announced changes in the Swiss Solvency regulation. With our capital position, we remain well-positioned to execute on our capital management priorities.

With that, I will hand over to Philippe who will introduce the Q&A session.

Thank you, David, and good day to all of you, also from my side. As David mentioned and as we previously announced, we have seen that we have adjusted format in the scope of our reporting for Q1 and Q3 to focus on the longer view of our performance.

As we mentioned to many of you already this morning today, we will comment on the key figures as reported in our press release and we will provide qualitative context of important underlying trends. We will report full sets of financials and the usual quantitative details with our first half and full year results.

Also before we start our Q&A, I would like to remind you to please restrict yourselves to two questions each and register again if you have follow-up questions. With that, Operator, could we please take the first question?

Yes. Good afternoon.

Thanks for taking my questions. The first one is would you be able to give us a little bit of quite achieved elements on the evolution in terms of underlying loss ratio both in P&C Re and Corporate Solutions?

Because you mentioned in the press release that natural catastrophe was partly offset by a favorable prior year demand in P&C Re and I'd like to know how much in Corporate Solution, if it was the case as well? And the second is on Ogden.

We saw some impact in many of the competitors. I'd like to know if you saw a negative impact from Ogden as well and if you offset that somehow by releasing results anywhere else.

Okay. Thanks for both questions.

I'll now get going to a quantitative further dictating of our combined ratio or loss ratios. As you seen in our release on P&C Re, we had a very broad base and just referred to as well across all lines of business, all regions, the prior year positive development.

I think it's again the mitigation of the quality of our book and some of the trends that we've seen of the recent years simply have continued without significant change. We had of course large Debbie loss which impacted P&C Re in the quarter of $320 million.

We had a revision in [ph] pretax, other than that, really no large Nat Cat losses, actually very low losses more broadly outside of the Nat Cat losses as well. On the corporate solution side, also an impact from debt and Q1 of $30 million, net of rest of session [ph] pre-tax, did have some negative prior-year development.

Nothing I think suggesting that the quality of our reserving or the process around our reserving is somehow suspect, or weak, or we've changed it. Just nature of the business for some of the losses coming in a little bit late and therefore they get grouped as PYD -- prior year development.

Overall for both of the units, we're not changing anything in terms of estimates that we've provided at the beginning of the year. We're one quarter in.

I think the first quarter has developed to our satisfaction, noting that from time to time we do have large losses. It's part of our business.

The overall portfolios have performed very much in-line with our expectations and I think given the circumstances have delivered a very satisfactory result. Ogden, yes, I've also watched and see how others now have been reporting.

Some people included 2016 as we did. Others from different reasons, I guess need to include it in Q1 of 2017.

I'm not exactly sure what drives that. Maybe it was where people were with the close of the 2016 year, but we were able to take it out as part of 2015 and as we previously indicated, looking at the change in the Ogden rate of the impact, we were able to conclude this very nicely within our existing reserving margins and our overall reserved margins remain quite prudent, quite strong.

Nothing really has changed in Q1 from our point of view. Obviously, we do have dialog from clients, all are just normal reserving process and claims process.

It remains a relatively uncertain area, uncertain visibility what the UK government may do. They've announced, 'We're going to review the situation' though we don't exactly what they'll do.

I'm certain in terms of how behaviors will actually develop with propensity to take lump sums versus the annuities subject to change as things like this just pack through change. Pricing levels will no doubt change in the UK market.

I think it's probably worthwhile for me to conclude on Ogden, just by reminding everyone and as we said earlier, I think in March, that overall, UK Motor Reserve represent only about 2.5% of our P&C reserving base. We have extremely well-diversified book, we have had and continue to have, I think, a prudent reserving approach.

We will continue to follow the developments in the UK. We had already adjusted our involvement in the UK going back to 2011 or so with handful of years ago when the move to PPOs became more prevalent.

So from our point of view, we remain well-positioned, comfortably reserved and now we're just engaging with our clients as part of a normal ongoing process.

Thank you.

Next question?

Hi, thanks for taking my questions. Two questions, please.

The first is on the Life Capital. Gross cash generation looks quite high there and ahead of the sort run rate that we would have expected.

Say, can you just - if there's anything specific that drove this? Presume they did some relatively one-off factors in there, but some commentary about how that would be helpful.

Please. And secondly on premiums.

Obviously quite a large year-on-year reduction in Q1. I see your comments about the Chinese quite a share; can you just remind us around stating the things like -- there are large quite of shares [ph] and so the tailored transactions that you did last year and potentially any sort of pipeline for tailored bills this year for what that might sort of look like for the full year?

Is there anything seasonal we should be aware of? Thank you.

Okay, thank you. Both good questions.

The second one may take me a little while to answer, but let me start with the Life Capital question. Yes, we reported in Q1 gross cash generation of $336 million which we're very satisfied with.

Two real contributors to that. One is just the underlying performance of the business is very much in-line with our expectations, perhaps even exceeding our initial expectations looking at the existing business, plus the business that we brought on board with the Guardian.

The underlying business is performing to our satisfaction - comment number one. Comment number two, and it's not the first time that you're seeing this.

In Q1 of each year, we finalize the statutory valuations of our reserves and then we do a thorough-up [ph]. In this year, Q1, this is we've had in previous years in Q1.

There's through-ups of that to a positive one-off. Both elements I think are sustainable.

I used the word one-off, but I think we continue to apply a prudent approach to the way we look at our reserve, prudent approach to the way we determine our capital position. And so I think the $336 million generated in Q1 is not something I would suggest you put into any sort of model for every quarter going forward, but I think it's a strong testimony to the recurring strings of the underlying business and the attractive cash generations coming off the business.

One final thing before I move on to the second question. In UK, we didn't really have a whole lot of movement in interest rates in Q1.

That's roughly contrast to what we saw last year where in Q1, rates move down significantly; Q2 likewise; Q3 they moved down but to a lesser extent; and in Q4, they actually moved up after the number of other rates around the world. This also has an impact on the level of gross cash generated.

Basically a decreasing interest rate environment with lower cash generation versus higher level of interest rates would lead to a higher level of cash generation. But as we indicated throughout the course of last year, we were managing the overall sensitivity to that interest rate exposure during the course of the year, having to start off the year with a relatively higher exposure as a result of bringing on board the Guardian transaction, the Guardian portfolio and then transitioning it to our ownership during the course of the year.

We continue to do that, that continue to optimize. I think relative to what we saw in 2016, I'll just reconfirm that we would expect the same degree of volatility.

We may still have some volatility there, depending on what happens with the interest rates, but the overall impact, I would imagine, would be significantly lower than what we saw in 2016. Onto your second question.

Yes, you've picked up the reduction in premiums more pronounced with the January renewal than in the April renewal. Big part of this is just the presence or absence of large transactions.

We indicated beginning of last year that we have indeed successfully closed a number of large transactions - not a single transaction, but a number of large transactions. We indicated that time that those are chunky.

They're not predictable, we have a very attractive pipeline, we have a very active dialog for the customers, but that's not the kind of thing that just very neatly falls in a linear fashion either in conjunction with the renewal schedule or even for that matter along a quarterly basis. Now if I look at this year's result, outcome of renewals and situations, these will be transactions.

We simply don't have in this reporting period the same level of large new transactions that we had last year and indeed we have reduced some of our capacity allocation in markets where pricing levels have continued to trend down to a level that no longer meets our requirement. And then finally as you referenced indeed in China, as expected, they're primarily driven by the change in the regulatory structure.

There are some previous large quarters shares that simply no longer makes in for our clients so that -- of course those types of structures are perhaps little more premium than risk in return and they do have a disproportionate impact on those premium written line. Other thing I will say is that net earned premium is pretty much stable with last year, just reflecting the solid high quality impact of the business we've previously written.

Our pipeline remains I think quite healthy, but difficult to predict exactly when transactions may occur. I can say there are clients who continue to be very engaged in speaking with us about possibilities that we may have to help them grow their business.

That's great. Thank you very much.

Yes.

Thank you. Good afternoon.

Two questions from my side. First of all on the Life Capital and the open book business.

It used to grow quite nicely. Could you provide an update here?

Does this mainly come from Group Life, Individual Life and could you maybe also talk about the lounge of equity in the U.S. and your expectations there?

And for the second one, actually a follow-up on the previous cash on the cash remittance on 2017. With $2.6 billion from reinsurance, $150 million from CorSo [ph], what are your thoughts here when it comes to Life Capital?

Gross cash generation was strong last year, also in Q1. Are there any reasons we should be aware of why it should not go significantly up off the previous years' numbers of $350 million to $400 million?

Thanks. First, we have seen good growth on the open book side which we're very excited about.

It's a very attractive market. It's going to be an attractive market for many, many years even decades to come if you just think about the projection gap in the areas that we're focusing on.

You have to remind everyone that it is still a relatively small business for us and therefore some of the growth levels, just looking at it from a percentage point of view will continue, I think, will be quite nice, but it takes some time for them to reach the overall level where you really start seeing it move the needle. But we're investing in this business.

Even though it has a negative impact of course on our short term reported earnings, it's not a surprising thing about the type of business that we're building, but we think it's a very attractive opportunity. So your question was about the underlying components and I can tell you that for Q1 2017, both group, the Life as well as Individual Life continue to show a good growth, developments in-line with our expectations and in-line with what we have communicated at the end of last year around our Investor day.

It's PUS [ph] were absolutely up and running now. We were successful in actually hitting our first policy over the line already at the very back end of last year.

It has been really tremendous delivery on behalf of the team. It's still very early days there, but we see also a very attractive market for us in the U.S.

We'll be coming back to these developments on a regular basis, I would imagine over the course of not only the next several quarters, but over the next several years. At your second question on the forward-looking statement on dividend levels from Life Capital - but first let me just confirm that indeed reassurance are paid $2.6 billion dividend during the course of Q1 up to the Group and the Corporate Solutions' $150 million in line with our expectations.

You may have also seen that. It's on the financials that we reported at the end of 2016.

Life Capital for a number of reasons, basically having to do with going through the proper process there - internal governance process, finalizing the through-up that I was just referring to in terms of the statutory evaluation and also going through the process with the regulatory bodies. We have over the course of the last several years as you'll see, if you look back at our reporting, dealt with dividend from the Life Capital units during the course of Q2 and that's what I would expect to do this year as well.

I won't make any forward-looking statements about the level of dividend in Life Capital. Just indeed to confirm that the cash generation there has been very much to our satisfaction and I hope to be able to report something to you, expect to be able to report something to you in the first week of August.

All right. Thanks.

Yes.

Hi. Afternoon, everyone.

Two questions. The first one is just on the reduction in pre-mittens [ph].

How much gap to -- does that kind of release much capital fees to you thus far, that's the first question. And the second question, it sounds like you're getting slightly more constructive on the UK Motor and the potential there after I guess a number of years of pulling back.

Is that a market that might interest you in the upcoming renewals later this year? Thank you.

Thank you for both questions. First and foremost, it's probably a disproportionate reduction and headlining [ph] gross premiums than it is in Capital.

Part of that has to do with what I just described when I was referring to these large Chinese quota share businesses. Not that much risk involved, therefore also not that much capital involved.

If you look at what we've done with our portfolio rebalancing over the course of the last, actually five years, and I'm referring then to both sides of our balance sheet, we really started rebalancing our liability portfolio back in the end of 2011 and gaining of 2012 when we first started talking about reentering the casualty market and likewise on the asset side of course, we rebalanced during the course of 2012, 2013, 2014 [indiscernible]. Now what we're seeing now with the premium developments, I think it would be fair to say the more disproportional impact on the headlining premiums than I think capital levels.

In terms of your second question, yes, constructive about UK Motor. I'm not sure anyone would - I think people would perhaps question a little bit my sanity if I started talking too constructively about UK Motor.

I think it's still a very challenged space, so quite a bit of uncertainty in terms of how the UK government would like to address some of the perceived challenges associated with the current process of determining this discount rate. I've seen some indications in the marketplace that clearly as a result of the change in the discount rate, pricing levels for a number of the segments in the market will need to adjust.

That seems to be a rational approach. I think it's important for you to recognize that we remain of course engaged with our UK client base.

We're trying to look at things with a very rational set of perspectives in terms of the attractiveness of the business. But there's still a lot of uncertainty there.

I'm not exactly sure when the UK government will be in a position to give additional clarity regarding potential measures they wish to take. I'm not sure, to be honest, what impact the snap election now in the beginning of June will have on the process of that review.

I guess it's a space we're going to have to continue to watch before I would be willing to start using the word 'constructive.'

Thanks very much, David. Appreciate that.

Yes. Thank you.

Yes. Good afternoon.

Vinit here. One question on Life Capital please and one on Life Re.

On Life Capital, I was just curious, there used to be or there's still an ROE target there and you have two points below that, quote obviously growth, cash admission is very strong. Is there anything that you would like to point out that, quite obviously growth cash admission is very strong.

Is there anything that you would like to point out that you would in these numbers which would suggest to gap or to bridge between the target and the achieved ROE on Life Capital? That's the first question.

Second question is on Life Re, the comment we said that there were two large claims in the U.S. and also that the investment [indiscernible] stable, but obviously are still achieving almost the top-end of the range of target on ROE.

Is it an indication that more investment income to be slightly better and if there are no too many large claims, then we could be able to shoot that as well? Just wanted to get the sense.

Thank you.

I'm not going to start talking about overshooting. I think the target, really in the case of Life and Health reasons, you start with that one through the cycle target.

I would look back at Q1 2016. We are actually well over the target range and Q1 2017 were very much in the upper end of the range.

When you think about this business as a large, mature, well-performing portfolio, from time to time we have some volatility that comes up in the case of Q1 now in the U.S. Mortality, we're looking at a couple of large losses.

As far we can tell, just a normal type of blip to be expected. Overall mortality trends continue I think to develop quite positively.

Q1 of last year, we talked a little bit about the fact that we have this positive FX impact which helped the reported ROE up well above the 12%. This year we didn't have that type of impact.

Investment income here really is driven off of a long term investment hold to maturity type of approach and has a very stable overall contribution satisfactory, notwithstanding we have low yield environment, stable and satisfactory contribution. Obviously if you don't start moving back up, then we would expect that contribution to also move up over time.

To the way I think you're saying about the Life and Health Re business is that we see it as a very attractive portfolio. We have a leading market position, we've been able to demonstrate good growth over the course of the last several years in excess of I think 6% or so compound average.

In Q1, it looked a little bit less. Part of that was just the FX impact if you think about the business we would have had in places like the Europe or the UK where we had a pretty strong dollar during the course of Q1.

That's just noise from my point of view. Underlying business continues to perform very much in a fashion that we would describe as attractive and stable.

As to your Life Capital comment. Let me talk a little bit about the target ROE which is very much still there.

First, that we have target ROEs for P&C Re which is 10% to 15% through the cycle; CorSo which is also 10% to 15% through the cycle; for Life Capital, it's a little bit of a narrower range, 10% to 12% through the cycle. In the case of Life Capital, we said the appropriate target that we believe for that business is on a medium term basis.

We don't think we're there yet for a number of reasons, but I'll get back to. We think an ROE of 6% to 8% is the appropriate figure.

Now, last year we were well-above the 6% to 8% and we always were quite careful to point out some of the depositors that were coming off of the interest environment there in the Guardian portfolio. The underlying target is unchanged, so mid-term 6% to 8%.

There are a couple of different factors that will determine a little bit the pace of which we did there. We know that the - let's call it for the sake of discussion, the pre-Guardian business was a low-ROE performing business for historical reasons.

Good quality business, but we have extracted some of the earnings from that around the natural crisis. So we knew it was a relatively stable, but low ROE business, exacerbated by the level of unrealized gains on our balance sheet.

Somewhere in the order, magnitude of third of the reported equity is just unrealized gains of this business segment, reflecting the long term duration of the business and therefore the long term investment portfolio that we have. I hope that's all clear.

We knew that in order to get to this mid-term 6% to 8%, we'd need to manage that business well, continue to improve the efficiency, make sure we have a fantastic operating platform, acquire attracting new portfolios and average that close Life business ROE up. We also have already said that we're really looking at business as an earnings diversification and a cash generation business - that continues to be very true and I think is being very clearly demonstrated with results over the last several years.

It's a final thing that may influence a little bit the timing of that mid-term target and then frankly the success with have with our investments in the open Life book business. But it's quite clear for a number of understandable reasons that those investments in the first couple of years of course will not contribute because it's free to that mid-term target, but we still think it's a very attractive thing for us to do.

So the mid-term target stays there. We'll still need to do some attractive transactions in order to achieve that target and the timing of achieving it will be driven by what happens with the unrealized gains, what happens with the timing of new transactions and of course the continuing developments on the open book side.

I hope that gives a good context for the mid-term target, 6% to 8%.

Thanks very much.

Thank you.

Thank you. Good afternoon.

First question is on pricing with providing interest rates. I guess net present value of future claims, payments comes down [indiscernible] initial signs that appears the market is willing to price in this higher investment income expectation and this basically refuels the price stuff, dealing especially in reinsurance which is a longer tailed business than primary insurance.

First question. Second question on investment income, I think you or the CIO mentioned in the most recent meetings that he expects flat running years.

And now running years is down 10 bips if I'm correct, 2.9 in Q1. So I'm wondering if you could give us an update on what the reinvestment use are right now and what it means for the inner outlook on this running year.

Thank you.

Okay. Thanks, Thomas.

No, I don't see any indication that serious players out there in the marketplace are now somehow calculating a higher interest rate into their willingness to charge lower prices and I hope we don't be able to see that for a while. We've all been talking about the fact that we expect at some point, interest rates to move back up and we're moving up a little bit at the end of last year, but obviously in the UK now, there were more of a slack and in the U.S., that's more relevant to some of these discussions.

not to be tracked down a little bit during the course of Q1. So now we certainly are not doing it ourselves.

As you know, we price on the basis of risk-free and we don't extrapolate all sorts of forecasted increases in pricing in order to somehow justify loosening the discipline on our underwriting pin.

But that risk-free is up now? I think that when you take the protected cash flow, that actually over the next couple of years and you have a 20 bips higher yield come off across your whole duration space.

Shouldn't that lead to basically a natural decline in premium?

I don't know about that either, to be honest. I don't know who has a crystal ball on interest rates and where the yield curve is going to go.

But coming back to your question, I certainly haven't seen that in the marketplace.

Okay.

Of course there could be isolated instances, but this is certainly not something that we've seen at a significant best. To your second question, actually I think if you hope to subject in the way I think with respect -- I think you may have misunderstood what our CIO said.

So let me just repeat that. He said, at the end of last year that we would expect based on interest rate levels that existed at that point in time that our running yield will be more or less flat with what we had at the end of 2016.

At the end of 2016 we reported Q4 at 2.8% running yield, Q1 2017 we report 2.9% so actually up 10 basis points. Now at the time we said we would expect it to be more or less stable, if interest rate is stable and they were at the time that we did that communication.

Of course in the meantime interest rates have tracked back down a little bit. We don't have any kind of anti-gravity boots as you know on the investment portfolio.

So if interest rates tracked down, that will have pull down running yields over time. It's not a dramatic of a move, but will move down if the interest rates move up.

Now of course we'll have likewise impact on the running yield. We're a long-term matched player.

I think if I look back not just the last six months, Q4 of 2015 and Q1 of 2017 total stability but just look at the underlying net investment income that is coming off at the back of this portfolio in the running yield or whatnot, I think we've been very successful in delivering a stable contribution and it is very important - as otherwise you could play games - and maintain a very high quality portfolio. So we haven't been going down the credit quality curve on this and you see that in a number of different ways.

If you look at the overall contribution of our portfolio, look at the level of impairments, I feel quite confident that would be the case going forward as well. Just to confirm, the reported ROI in Q1 was up about 10 basis points versus Q4 2016, clearly down from Q1 of last year, but that's no surprise giving overall interest rates moves over that period of time.

Expectation going forward is in-line with what we have previously said. Obviously where we driven off of the direction and the pace of any changes in interest rates, but we were maintained a very solid, very well-performing portfolio.

So we remain comfortable with this ongoing contribution.

But just pulling on the 2.8 at Q4, that would mean that you reinvested 2.8 if you want to maintain 2.8 in '17?

No. That's not what it means.

It depends on the normal roll off the reinvestment yield and whatnot. But what it basically says is that at the level of interest rates to what we said, the level of interest rates have existed at the time of our report on Q4 2016 that a great state of that level more or less, that our overall running yield will be more or less stable with what it was in Q4.

Okay. Thanks.

Very helpful, David. Thank you.

Yes. Thank you.

Hi, good afternoon. Thanks for taking my questions.

Just two for me, please. Just firstly on the cyclone Debbie loss.

I know you have the figures out for some time, but I just wanted to gauge your thinking as to why the market share of that loss was perhaps a bit higher than we were expecting? And secondly, the April renewals were down by just 2%.

Obviously there's a much bigger retrenchment at January. I was just wondering why this slowed down in the retrenchment?

What policies have I missed earlier? Thanks.

Okay. I'm going to ask, if you don't mind, Jonny, if you just repeat the second question?

I lost one part of the sentence. You talked about the slowdown and the retrenchment, but I missed.

Yes. One more obviously, you guys pulled back a lot on the premium side in P&C Re, but the April sort of renewals, those will be the slowdown, it was just down 2%.

Is that just due to the renewal mix and the reasons for renewing? Okay.

Okay. Thanks.

That was clear. I just missed the first part of the question.

On Debbie, first, we're leading reinsurer in Australia and we're very happy to be a leading reinsurer there. It has been an attractive market for us, we have excellent client relationships.

From time to time, losses occur there of course and then we fulfill our claims commitment and we expect to indeed earn it back. That's the first thing I would say and I think it's a very attractive - has been a very attractive overall allocation of capital and I would expect that that will continue to be a market that shows from time to time, given the situation.

Nat Cat losses of course as well. But I think the fact that we have a little bit of a larger market share there is because we are one of the leading reinsurers in Australia.

Two, it just has a little bit to do with the specifics of this storm and where it hits and specific damage here and there and programs that we were on. Nothing I think particularly noteworthy there.

Other storms were from time to time, other large reinsurers show up with relatively larger share, so I think those are just somewhat random effects based on the specifics of exactly where the storm hits and does the damage come from served, or does it come from win; those type of things. And the third thing is that of course in addition to our reinsurance business, we're also active in the market with the corporate solutions and you see that 20-50, roughly what is that; just about [indiscernible] $30 million, we estimate it will impact our corporate solutions.

So there are a couple of things there that led to a larger share of the market than the price of what people would normally expect. It's one of the reasons we actually decided to come out with the ad hoc, because we had the sense that markets indeed was necessarily fully reflecting our market position in Australia.

As to the second question, you actually answered your own question. We have of course been pruning our portfolio on the flow side and I wouldn't say necessarily that it moved on a whole lot between the January renewals and the April renewals.

Obviously the April renewals are off together, significantly smaller than the January renewals. I think probably a larger impact on the overall level, because you said to pull back on the premium side, where impact such as these Chinese quota shares which were really a January impact as opposed to anything else.

What I'll also say is that we continue to apply our approach, which is where client center go well. I think economic and looking at the attractiveness of business and engaged practically with clients to allocate our capital to the opportunities with them to give us an attractive return and if others are willing to provide capacity at levels we don't think are appropriate, then we scale back our participation there.

I also think that our earlier comments about markets has been softening. It's important to start saying it's soft.

I remember Matt Webber describing the market some time ago, we just use the word 'soft.' More or less around that previous time, subsequently as well, we see that ongoing developments are now - it's quite clear that there's a stabilization broadly that's taking place here and there.

There are still some minor decreases in pricing levels, very much in-line with our expectations and I guess it's also not average lying with what you hear with other market participants, and then we have a couple of various where losses have occurred that we actually some just price stability, but actually some positive price developments as well. That's the way I would describe the perspective from April versus the perspective from January - not really a significant difference in view on the market circumstance or pricing developments per se.

Thank you very much.

Thank you.

Hello. Thank you very much.

David, how normal was the tax rate in the first quarter with the group by division? In particular, when I've looked at CorSo, the only way I can get to your profit is knowing how to breakeven underwriting results with either by assuming massive capital gains, which seems unlikely or some good fortune on the tax firms.

So if you could just comment qualitatively on how important the tax rate was against normal? And then secondly, the outlook for the quarter, your 100% combined ratio included by the challenging use on large losses and positive, is there a development for magical [indiscernible] that you won't disclose, would presume would be a lot lower than 100%?

I don't imagine you're going to change your 103% guidance for this year, but the implication is that the next three quarters is going to be 104% or 105% if your original guidance is still good. Can you talk a bit about how we should think about the great first quarter against 103% expectation you set for the year?

Thank you.

Yes. Thanks, William.

You're right. You're absolutely right.

I'm not going to go a lot deeper into quantitative figures here for the reasons that we stated. Appreciate the question, but we're not going to do it.

But I will tell you a little bit about both questions. First, the tax rate.

Tax rate in Q1, if you look at is basically just about in-line with what we have informed you should more or less expect from us. I think we ended up just above 20%, 21% for the quarter, which is just about what you would expect, given the Swiss' home base, but also the geographic mix of our business is always some elements of discreet items [ph] it impacted.

But overall tax rate for Q1 pretty much right in-line with what we previously communicated to the marketplace. Each of the units has this pluses and minuses, but I won't go into that now.

We certainly will come back to it at first half. In terms of the estimate that we've provided, you used the word 'guidance,' but I'm clearly using the word estimate as we always do.

I want you to understand that estimate is just that estimate that reflects our assumptions about a number of different factors, pricing level developments during the course of the year, business mix developments during the course of the year, the timing of the individual transactions that may impact the way these numbers are calculated if you think about it on an annual basis over the course of the year. You're absolutely correct.

I'm not going to update the estimate that we've provided either for Corporate Solutions or for P&C Re at this point in time. I don't think there's really a strong basis for doing that.

We recognized that both segments, I think produced good results in Q1. We remain confident about the quality of the portfolio, but there are just too many moving parts.

This is our time to manipulate this estimate on a quarter-by-quarter basis. It's an estimate for the full year and as when we would see a clear indication that we think there's something that we need to inform you about the estimate, of course we would do so.

Thanks.

Thank you.

Good afternoon, everybody. I have one question left.

This is also on the tax rates, but looking forward. Could you comment a little bit on the impact from our corporate tax rates reform [indiscernible] the corporate tax rates was down to 15%.

What did it impact on your side? And also overall comment on how big your profit basis along the years?

Okay, thank you. First, we're extremely pleased with our U.S.

based business as a significant component of our overall mix in there because the whole is something in the range of 35% to 40%, of which a significant part of course will be the U.S. to profitable business for us and we would expect that to continue to be the case.

Obviously you can always have a large storm there that may from time to time influence those results, but by enlarge, it's a meaningful profitable contributor to overall result. Yes, what's going to happen to U.S.

tax rates, that's a fantastic question. I wonder anyone who knows where they're hiding because it seems to be less and less clear as we go forward, even noting that there's been some communication from the White House recently about what they were like to achieve.

It was about a short on detail. I'm not really sure what level of support the proposals have been articulated will gather in the Congress.

It's such a difficult thing, Frank, to say. There's offsetting possible impacts.

No doubt, it's some form of border tax adjustment comes in. We'll have to look at the way we structure some of our business and I'll have to think about what that means for us, new ways that we can manage of course.

We just need to wait until we know what may happen, if anything happen on that space, in order to be able to respond. If there's a reduction in the absent level of the corporate income tax, we'll have to look to see what other changes are there in terms of reductions and other things that typically comprise the overall final net corporate tax level.

Just looking on normal phase value and reduction of corporate income tax on long term basis will of course be a positive for us, giving my comments about being a profitable market for us. I think we'll have to look to see how those changes would impact existing tax positions that we have on our balance sheet and that could be neutral, it could be a positive, it could be the negative.

A lot depends on how the actual tax reform will be implemented and from my point of view, it's unfortunate, but it is what it is. It's just too uncertain to think.

But do you have DTAs that would need to be written down in the first step?

I don't know. We do have DTAs on our balance sheet, so there's no doubt that it could be a day one negative impact, which will then of course reflect itself on a longer term basis in TD basis in terms of the more attractiveness of the future income streams.

But Frank, there's just too many moving parts for us to say and I could speculate about all sorts of proposals that get sorted from time to time. I think for us, it's important to keep a close eye on it as now I'm sure that many others are doing, to look to see what actually is able to find its way through the holes of Congress and ultimately into a new tax code in the U.S.

and as when we get more clarity about it, of course we'll think about what specific measures we may wish to take in response.

Okay. Thank you.

Yes. Thank you.

Hi there. Two quick points of clarification just from comments you made earlier.

First of all, you used the phrase very low losses outside of Nat Cat. Are you implying that the man-made large losses were unusually low in this quarter?

I guess both the P&C Re and CorSo. I'm not quite sure what you mean by that phrase.

The second phrase you used, you said that either including Ogden yield and in fact, in your 2016 results you were able to pick it up, I think is the phrase you used. I just wanted to understand what you mean by that phrase, if I look at the triangles, particularly the most [ph] triangles, there's no discernible change in loss pick except for 2015 year, which I believe is U.S.

also related. I guess that could mean there was positive and negative offsetting, but is it more that you didn't pick it up until the '16?

When you went back and you looked at it, you just felt that there's enough margin to absorb the issue. They're not particularly you actually tweak an extra or added to results more often; just wanted to clarify that.

Thanks.

Yes, thanks. I can give you a very short answer to your first question which is yes.

I'll see if I can repeat the question that you asked. When I said there's a relatively low level losses, does that mean low man-made losses?

The answer is yes. And that applies frankly to both segments.

We had a relatively higher level of Nat Cat losses and low level of man-made losses in the quarter. Random occurrences.

After your second question, we've maintained a prudent reserve for many years. The developments in the UK are not new, we've been watching it for some time.

We maintain an overall very big healthy margin on our reserve -- notwithstanding the reserve, at least is that we've shown over the last couple of years for the different reasons that we've talked about. The overall level of reserving, I think has remained quite prudent, quite strong.

So when we looked at the change in the discount rate, we came to the conclusion that the way we thought about our reserves in the past, the different offsetting items there, that's just to confirm our conclusion that our reserve in levels were actually more than adequate and that continues to be the case today. Of course we now are still in a normal process of looking to see what develops in the marketplace, how our clients are responding to the changes, working with them on their new business, the propositions working with them on ongoing claims that come in just as we were in the period prior to the rate change.

We've dealt with it. As I mentioned, overall, it's 2.5 percentage point of our reserving base.

The changes in the UK market are not new. It wasn't that suddenly people discovered that there was something called an Ogden rate in whenever day it was announced, February or March of 2017.

It's something that we've been aware of for some time. We have, I think in overall, very well-established and prudent reserving approach and therefore we were able to - maybe you look at that and say given all the use that has developed, ongoing questions about what the potential threat also will be, but uncertainties were not.

We feel very comfortable with where we are reserved with the margin through on the May 4 as well.

That would be why I wouldn't see any real change in lost picks because it wasn't required essentially with hindsight.

Yes. I think in our overall portfolio and our overall reserving levels, yes, that said, that's really true.

There will some individual components that will move and of course we'll adjust accordingly, but the overall impact is simply within our pre-existing prudent reserving margins.

Okay. That's great.

Thank you very much. Thanks.

Okay.

Yes. Good afternoon.

Two questions on my side. The first one will be, would you be able to comment qualitatively on the AIG issue potentially to put a different Q3 -- did it keep lying into the sand on an issue or a story which has been on top of investor mind in Q1, probably is ragging [ph] your share price performance in Q1.

Any qualitative comments on the process you've been undergoing in Q1? The results and potentially I will say [indiscernible] on that?

And second question will be on the SST. Anything you would point out in terms of the moving parts along different moving parts in IBC or total capital revolution 2016-2017 versus 2016 and how we should expect the different components [indiscernible] to evolve going forward?

Thank you.

Also a request for forward-looking crystal ball. Okay, let me start with AIG.

Thanks for asking the question. I was almost going to be surprised no one asked.

Indeed I hope I can somewhat put a line under it now. I understand the questions or whatnot.

AIG made a number of comments back where they announced in developments on their reserving side which obviously directed people's attention to Swiss Re. It's a significant clients of ours, has been for many, many decades and I hope will continue to be for many, many decades going forward.

Listen, we don't talk about client business and I'm going to hopefully blow high on the sound on this one here as well, but since it has been in the public domain and we responded to it already at our full year results, let me just confirm that we have received ongoing information from AIG. We continue to be in the regular as we would always be with our large clients, dialog with them about their development.

We've looked at the most recent information we proceeded from them. We analyzed it in quite some detail as you can imagine, already par to full year results, but now also in Q1.

We remain comfortable with our overall level of reserving. We reserve on the portfolio basis.

We're still on our early days here so we'll see how this matures over the next couple of years, but there's nothing that has come to our attention and I can tell you we've been paying attention. This led us to adjust our overall reserving levels.

We have a number of different activities with different clients in the U.S. market.

Clearly there are some parts of the market in recent periods going back to the end of 2015 even, I believe, but certainly during the course of 2016 culminating with the announcements that AIG made earlier this year. That suggest that there's a need to adjust reserving levels of the U.S.

and you actually see now overall in the marketplace that some of the positive developments that were supporting the profits there for a couple of years has started to pave the way in aggregate. But it's not something that's surprises us and we've talked about that for a while.

We've talked about the fact that we thought it may not be a bad time for us to start entering into the market already a couple of years ago because we recognize that - you see that in eyes open fashion, recognizing there are a number of trends that are likely to over a period of time impact loss levels and pricing levels and I think you can hopefully be well-timed in your decision to rebalance the portfolio. That's exactly what we said back in 2012.

I think you've seen us do it, but the overall portfolio mix right now to be fair, I think we've probably achieved quite a significant degree of rebalancing both at the growth in our casualty book - it's a healthy growth, a profitable growth - as well as trailing back some of our property Nat Cat exposure due to pricing developments in the marketplace have let us with a book that we consider to be very healthy. We remain comfortable with it, we remain comfortable with our reserving levels.

I hope that we can draw a line under that.

Thank you for the question.

Then there was a second question on the SST.

Yes, indeed. SST.

Obviously there was the change in [indiscernible] which if we restate the 2016 assets to, which was to 223 under the old methodology, it became 261 under the new methodology. And then 2017, SST, we move up to 262 - a fairly modest move overall.

I don't mind giving a little bit of additional flavor to that. Number one, we remain well-capitalized and we remain capitalized above the level that we've indicated is our respectability target.

We do that because it provides us with quite some flexibility in order to respond to market opportunities. If the market opportunities arise, we want to be able to act quickly to capture them.

If the market opportunities don't arrive and we come to the conclusion we're really sitting on a bus on top of a bus, then we look for ways to return it. So just to put that context there and remind everyone of our capital management to philosophy and approach.

Our RBC under SST increased by just a bit more than a billion to just over $50 million [ph] in 2017. Basically at the back of profitable underwriting and investment contributions, but also reflecting the dividend projected as well as share repurchases in 2017.

We also had some minor impact off the back of reduction and some subordinated bond, as well as some minor FX impact. Overall target capital remain more or less flat [indiscernible] portfolio mix, different market, the challenging market conditions are overall flat.

The market's value margin also which is basically the capital cost for the run off period, relatively flat. If you did look at on a headline basis, you'd almost come to the conclusion nothing happened, 261 to 262.

I think I would think about it a little bit differently. We did a lot of exactly what we said we were going to do in 2016.

We generated good profits, we invested in a number of areas and we concluded that we were holding excess capital, so we sought to return it to our shareholders. That's something that we've been talking about for a number of years, something I hope to continue talking about a number of years and not just talking about, but the demonstrating.

Net results of all of this move was that our capital position remains, I think superior, which is exactly where we'd like to have it. We maintain quite a bit of flexibility and of course we'll watch to see what happens with our profit developments this year and our investment opportunity this year.

As we get a little bit later in the year, we'll look to see whether or not it makes sense to do something with the share repurchase program that was recently authorized by our shareholders. Once again, exactly in line with the way we communicated above that last year around this time and the year before that.

Thanks, David. Can you remind us from the cash position because you see the forward-looking measure of your capital development decreased and because you asked formally for the authorization for feedback yet $1 billion in terms of share buyback or so, so your official announcement had not been made yet, but is that accrued already or it's still not reflected in the numbers reported this morning?

Thank you.

Once again, short answer, yes, it is and very much aligned with what it was last year as well where we also had the similar type of report. It's just the way the SST function, is there is reflection of forward-looking capital the management asked.

Okay, thank you.

Thank you, David, and thank you, everyone for joining us today. We've come to the end of our Q&A session.

I hope you don't hesitate to reach out to any member of the investor relations team if you have follow-up questions. With that operator, back to you.