Swiss Re AG

Good morning and welcome to Swiss Suisse 2021 results Media Conference Call. My name is Elena Logutenkova, I'm head of Media Relations incorporates reports in here at Swiss Re.

And I'm joined this morning by our group CEO Christian Mumenthaler, and our group CFO, John Dacey. We will start with the presentation of our full-year results, and then we look forward to answering your questions.

And now it is my pleasure to hand over to Christian Mumenthaler, our group CEO.

Thank you, Elena. And good morning, good afternoon where you are in the world.

Thank you for joining our call and I hope you're healthy and safe in these turbulent times. I definitely hope that by the half year results everybody will be back physical in the room and certainly I think that's a hope shared by many.

So let me go through the first part of the investor presentation. You have the full-year results, I'll talk to the full-year results.

I'll talk about the outlook and financial targets and about sustainability and what we have done in 2021. I start with the financial results, and you can see here on this slide, we flipped from a negative, and then [Indiscernible] some negative of minus $900 million to $1.4 billion of profits net income in the year.

The gross was about 5%. We had a very good investment income of 3.2%, and [Indiscernible] of 5.7%.

If you take the segment [Indiscernible], we had the P&C Reinsurance published combined ratio of 97.1, which I consider to be very good in the year, which is the fourth costliest nat cat year in history. And I think this is a lot of thanks to our underwriting actions we took at the 11 renewals, a year-ago.

We have Life and Health reinsurance of a negative RE of 8.6%, so all the losses come from there, and I will elaborate on that in the next few slides. Then, with Corporate Solutions, we have an outstanding 90.6 combined ratio, truly outstanding; the normalized one is higher than that, but there was some releases and reserves, and so you get to an extremely attractive combined ratio.

It's probably the last time we're going to talk about turnaround in Corporate Solutions; clearly, we have achieved that goal. And then, iptiQ, our B2B2C digital insurance company grew by nearly 100%.

So let me go through the obvious issue, which is the Life and Health and COVID issue, which cost us about $2 billion in the last year, so the underlying earnings without COVID were $3 billion. And you can see the breakdown of where this is coming from.

The P&C part which was prevalent in the year before has become very small and that's thanks to the wording and underwriting actions taken a year ago to exclude pandemic from the wording seven P&C so very small impact on all the impact comes from Life & Health, free quarter of which from the U.S. So, I have decided to give you a bit more details on that and dive into the U.S.

situation. The slide is maybe a bit complicated, so bear with me, I will lead you through that.

So what you can see on the slide here, is the actual booked COVID loss in every particular quarter, that's the straight dark blue lines, so you can see, we booked a very high number at the Q4 2021. But then we also allocated the losses to the quarter where they incurs so where the people dive, because there's significant delays in the whole system and so you can allocate it back.

And you can see from this chart that the higher booking we had in Q4 '21 is as a large -- due to a large parts to a higher booking or additional bookings we have to do for the Q3 at 2021. And you can also see the reason on this chart, we show the excess in mortality in the U.S.

The orange line is for all ages and the light blue line here is for the basically working population between 25 and 64 years. And what you can see is a very heavy of surprisingly heavy wave also for us, and I think very little less being talked about that in the press.

Unfortunately, in the U.S., around Q3 -- Q4, which is the delta wave that hit the U.S. And you can see elevated mortality to a point we have never seen in Europe.

So, at the peak it was 60%, 70% higher excess mortality than in the previous years and what was the expected as normal. So, there's a real tragedy here that has happened in the U.S.

It was not totally visible by the end of Q3 because you can see the wave was going up, all the data you see here is not that data we had at the time, the date is about three months delayed. So, it was very difficult to assess the situation at the end of Q3.

And so here I think the complete picture and from everything I've seen from us and from competitors, I think our losses overall are commensurable with our exposure where the largest [Indiscernible] Reinsurance mortality player in the U.S. with an older book than most other people.

And so, the results, unfortunately, as was expected in view of the excess mortality that we saw in the U.S. On the next slide, I just remind everyone that the -- while on the P&C side there were clearly surprises of the effect of the pandemic on the Life & Health side, that's a risk that is well understood, well modeled for a very long time, actually has it published in our annual reports in terms of one- and 200-year loss.

What we're seeing here, we assumed always a global pandemic every 30 years approximately, and we always charged about $ 180 million per annum for pandemics in our life and health business. Now, in the situation where there's higher risk awareness and a lot of anxiety, we were able to food last year to increase margins quite a bit, as though we have an additional $250 million to $300 million of margin that's come in.

And so, the two combined will allow us to have a payback of the situation in a reasonable time frame. As the pandemic is transitioning into an endemic state that certainly I think the [Indiscernible] and what we're seeing here in Europe, and we would foresee this to also happen with time delay in the U.S.

I think it's important to take a step back and look at Life & Health, which we see as an extremely attractive business overall. And here are some figures from the past.

So you can see here the overall EVM, so economic net-worth -- economic profits that was generated in Life & Health has nearly doubled from 2015 to 2021 and we're also able to diversify the portfolio quite a bit. And below, you can actually see the economic earnings from this business, which are significantly higher than GAAP.

In GAAP, when you have economic earnings, which will come through GAAP over time, GAAP basically earns this over a very, very long period of time, sometimes up to 50 years. And so all the growth we had in Life and Health is in terms of economic growth we had in Life and Health, is not all visible in our GAAP figures.

And I say that because in 2024, we are going to switch to IFRS 17, which is a standard that's much closer to our economic standards, and therefore, will better reflect the heightened economics we had over the last few years, though we're clearly looking forward to 2024. Let me now turn to the P&C businesses.

So we have P&C Re and Corporate Solutions. Many of our competitors have this in one reporter as together, so if I put them back together, the combined ratio last year was actually 95.8%.

It's not on the slide, but it's just interesting number to know so that we are extremely pleased that through our significant underwriting actions, you remember a year ago we actually shown some of the portfolio, we exited some of the aggregate covers and this has really paid off in terms of what has actually happened in the year, which is the -- as I said before the fourth costliest year in history and for that I think we fared extremely well. You can also see here to normalize combined ratio, so it went down another two points, as a reminder, every point is about $200 million of underwriting profit.

And if you if you go back a little bit more, a few years, you can see that we decreased this normalized combined ratio -- the underlying combined ratio by about five points. So that's a billion more income that's coming through compared to these years.

And while obviously still going to be volatility around that, it makes the book significantly more resilience to shocks. And so based on everything we see, we will -- we actually achieved here the target of less than 95% normalized, and as I will come up later, we have a slightly tougher targets for this year.

I come to CorSo. As I said, this probably last time we're going to talk about a turnaround.

The outcome from last year was quite spectacular. The normalized one is actually higher, so there were some positive one-offs.

I think it's important to look at the normalized figures. Obviously, a lot of work has gone into this portfolio for many years and it takes time for it to earn through and become visible.

But I'm extremely happy with where Corporate Solutions is at this moment in time. They are in a very, very strong position, and they were also able to achieve the target for 2021 of being below 97% combined ratio.

Looking forward we had overly renewals, we're very happy about the renewals. Were able to grow the premium by about 6% as shown on the next slide.

We have been cautious and selective so this is, I think a cautious growth overall. In terms of price change on a like-for-like basis, we estimate these to be about 4%, but we also decided to put this 4% also in the loss picks.

So basically expect that inflation -- different forms of inflation will increase the expected loss by the same amount. So, net-net, this is zero, so the price increases really in this view and only time will tell whether that's correct but, in this view, the price increases are here to compensate for these inflation effect.

Now next to that, we also had some portfolio shifts, so we'll shift more into nat cat, which we will have a positive impact on the combined ratio, which is why the targets will be set 1% lower. And if you look at the discounted views or the economic view of combined ratio, there's an additional point here because interest rates have moved up.

In other words, for the premiums you get from the business, you will get higher investment returns. So, in terms of economic increase, price increase, you have 1% positive year.

In terms of GAAP, this will come through higher net income on the investment side. Overall, this renewal we have is about 46% of the total premium we'll get through the year.

The next slide shows a bit of a deep dive of where we grew and where we're strong so casualty we continue to be cautious. We certainly don't want to have an overweight position in this some of the multiples we saw some profitability issues.

So a general cautious attitude, we shrunk a bit, and vice versa on the nat cat side. We could grow significantly.

Prices have gone up a lot. People are afraid of the risk which is typically when it's the best time for us to move in.

And even last year with the situation we had and a higher-than-expected nat cat load, the business was still performing extremely well. We've combined versus below 80 so it's definitely an attractive business for our balance sheet, which profits a lot from a massive diversification effect within P&C and with Life & Health.

Leads me to the dividend, so we decided to keep the dividend unchanged at CHF5.90. We have unchanged capital philosophy, we want to make sure the capital is strong and the capital is overly strong around the mid point of our 200 to 250 range.

So that's good. We will grow the dividend or keep it equal, and that will be obviously as a function of the business environment.

And as you've seen, the business environment is probably the best we had for eight years in terms of the P&C one, and actually also Life & Health with high margin, then over the last few years. So we think it definitely makes sense for shareholder to invest every bit of capital we can in this attractive environment.

In view of this environment and looking ahead over the next few years, for us to become very clear that the current target which we have, which are defined over the cycle and have been criticized as not ambitious enough, which is 700 basis points both risk-free, to replace that by a point target in 2024. We have a bit of an outlook to 2024.

We can see a normalization from COVID that is expected by then. We talked in the last Investor Day in 2020 around the Life & Health book that was still affected by all the U.S.

book pre -2004 business. And this -- some of that burden will fall away starting 2023.

So there's a bit of upside there. And then, we have the earned through of the high margins we have now, because in GAAP everything we do now and the renewal will be earned over two years.

So we always have a bit of a smear effect over time. And then, finally, we can see possibilities for some profitable growth at very tight cost discipline.

So, there's this as an additional lever, which leads us to 14%. You can see at the right, we talked about IFRS.

The reason is that by 2024, we'll actually have moved to the IFRS standard to be more comparable to all of our peers. We're obviously in the midst of the modeling phase of that, there is a lot of decision we still need to take, but it's very clear from what we see now because of a more philosophical point of view of how IFRS looks at Life and Health, that the same earnings we have now in Life and Health, will be higher and the ROE will be higher.

So this is what we see at this stage with the current modelling with some quite high certainty. More broadly, the summary of all figures on the [Indiscernible] 2024 figures.

We keep the 10% in W per-share growth. We have now this 14% targets to achieve until 2024 but then we also have a look at 2022, which as we can see from Q1 would certainly still be affected by COVID in the U.S.

We see all the [Indiscernible] in Europe, which is, I think developing extremely positively in terms of switching towards the endemic stage and we assume the same will happen with some delay in the U.S. So, this leads us to a [Indiscernible], reinsurance net income of about $300 million assuming a charge for COVID for this year.

As I said, the renewals will point out to a combined ratio lower than 94 and normalized combined ratio from P&C. And then in Corporate Solutions, we chose to talk about the report that combined ratio on the normalized one because by now CorSo has a boat enough reinsurance, has enough protection, has basically established itself as a standalone unit that can withstand a lot of these challenges and market practices to not have anything normalized so they are comfortable with lower than 95% targets.

And all of that leads to approximately 10% return on equity for 2022. Finally, let me talk about sustainability, which remains front and center of everything we do at Swiss Re.

This is not -- there's never an end-stage. This is a constant process, a constant improvement we need to do, and the world is moving very decidedly in this direction.

The expectation by shareholder is very high. So, on the underwriting side the biggest development is that we co-founded this Net-Zero Insurance Alliance, which has a mingle to be able to quantify the carbon footprint of the underwriting business and the liabilities, which is [Indiscernible] quite a challenge, and we need to come to agreements to be able to measure it, to be able to reduce it afterwards.

On the investment side, we're a bit more happy because these measurements are possible. Overall, we have switched to ESG benchmarks a few years ago, and this portfolio, this choice continues to outperform on a three-year average.

And then within these targets of carbon, we have set minus 35% carbon impact intensity of our asset’s portfolio by 2025. And then finally, our own operations we've done already a lot.

We have started to charge $100 per ton internally for flights, for example. This is then used to buy some offsets, in this case, we entered into a 10-year partnership with Climeworks, which is one of the few startups that exist that do direct air capture.

So extracting carbon from the air is still very expensive, but they need initial investors in some of these technologies to be able over time to reduce the cost of these extractions. And we also launched an internal program, NetZeroYou2, so this is sensitizing employees and allowing them to also lower their own footprints -- their own comfort -- will be aware of their footprint, but also lower their own footprint.

And we have a very strong take-up of this program internally. So this is all from my side at this stage.

And with that, I hand over to John Dacey, our CFO.

Thank you, Christian. And at this point, I'll probably provide a little more detail on some of the operating businesses.

From the financial highlights, on the cover page, we've simply listed the different businesses in front of you. And at the bottom of the page, reminded you that absent the COVID losses, the earnings for the group would have been $3 billion for the year, nearly 12% return on equity.

Those losses were focused very much in Life and Health businesses, and we'll explain how that business has developed in the course of 2021. Before I get there, P&C Reinsurance, a very strong performance.

In the first case the premiums grew by 5% up to $21.9 billion. The margins increased dramatically because of the absence of the underwriting losses from COVID that we had in 2020.

You see the combined ratio in the chart on the right, Christian mentioned the numbers that actually get reported during the course of 2021, where we did have a very large load for nat cats, actually 2.8 percentage points above what we expected for the combined ratio. That said, we still delivered a 97, the best result since 2016.

I think down below what you see is a dramatic reversal and rebound to profitability of this business. Reported earnings of $2.1 billion after the loss in 2022 that was resulting from large provisions set up for COVID positions.

A little more information about our business. You can see we remain very diversified geographically and by line of business, property remains very important to us.

Our liability book continues to be adjusted downward as a top percentage of the portfolio that we have. Importantly, our cost ratio continues to fall year-on-year.

We're able to contain the costs as we grow the business. And so nearly three percentage points improvements over the period that you see here.

The business itself continues to be supported strongly by our solutions and property casualty, and by the transactions. The economic value of those two are shown here in the lower side of the page.

If we move to Life & Health, again, a nice premium growth on top of what was a strong position last year. This is a franchise that continues to grow.

And as Christian showed, we're able in fact to increase the margins of new business. What you see here in the net operating margin is negatively affected by the COVID losses that we booked during the course of 2021.

I remind you that the actual number of [Indiscernible] in 2021 worldwide were similarly twice those in 2020. We've moved from Life & Health, unfortunately, from a small profit as reported on the bottom right in 2020 to a $500 plus million losses in 2021.

We expect that to rebound as Christian said, to a profit in 2022, although that will continue to be affected by the COVID losses that we'll book in the first and second quarters in particular. We've also shown here on the bottom right what the earnings would be without the COVID losses to show you the robustness of our core business in Life and Health that we continue to grow.

That supported again, on the right side by the solutions and transactions, probably even more important as we go forward, as we help our primary clients with their blocks of business. Once again, on the expense ratio you see that we are able to contain our cautious, we bring that down year-over-year-over-year.

And lastly, on the left side of this chart I can simply point out the relative importance of both the Americas and the mortality book in Life & Health Re is one of the major reasons why you've seen the size of the losses that we've booked in 2020 and 2021 related to COVID. Christian has already given you the highlights of Corporate Solutions.

I might add that for the first time in three years, we've actually grown the book on net premiums earned up 6% from $5 billion to $5.3 billion. The operating margins rebounding dramatically after last year where we had substantial COVID losses as well.

We had a loss for the year in 2020. That's reversed and rebounded to a strong profit, actually, probably CorSo's strongest profit ever in 2021.

The combined ratios as Christian mentioned as reported dropping down below 91%. When we adjust for what was very positive, reserve adjustments, we're still at 95.

This is a massive improvement over where we had been on a normalized basis in prior years and we continue this trend. We have put in place not only this diversified portfolio but a reinsurance program which leads us with confidence to predict that we will have an estimated combined ratio below 95 in 2022.

The business is diversified again geographically and by line of business, you see the relative importance of property and the reduction of the casualty liability lines in this book of business, thanks for the restructuring that was done now three years ago. On the right side, you see again, cost efficiency continues to be looked at in this business as well.

A slight increase in the cost ratio we continued to make investments in this business. We think it's the opportune time for us to continue to find ways to run technology into the core operations of Corporate Solutions.

One of the places that has manifested itself is the increase in our international program Lee (ph) capabilities. This is not only for CorSo 's own book of business, but you've seen recently our announcements that we brought some major players, MSIG in Japan and the Hartford in the United States, as partners utilizing this program.

They appreciate the world-class technology that's been put in place for this international program lead under Project Pulse. Last, a few words about our B2B to C business into Q.

A strong performance in 2021. You see the premiums have increased over the period, another 95% year-on-year.

We've seen the inforce policy count grow even faster. The adjusted gross income, a good measure for this business of how the underlying profitability as we continue to expand looks is positive.

We did have some COVID losses in this business and some modest losses in the natural catastrophes in Europe, the July floods in particular in Germany. The EBIT number is negative and a drag in our group items amount.

This is the new business strain of this expanding business. On this chart, we can tell you, again, the geography where we're booking the business.

You see the relatively strong importance of EMEA, an increasingly of the P&C business that we've launched in EMEA in 2020. The underwriting results modestly deteriorated because of those COVID and nat cat losses.

The operational performance, I think, is a massively important statistic for us. The operating expense ratio is down materially as we grow our topline much faster than we grow our expense line.

That expense line would also include the acquisitions cost for that new business, and we expect this to continue to fall year-on-year-on-year as we move towards a break-even. The business expansion, again, the number of distributors is core in this business.

It is a B2B2C business, and those distributors were 11 new groups signing up to work with iptiQ in 2021. A brief look at the group investments.

A strong performance of 3.2% return on investments for the full year. What you see here is a reduction in the recurring income yield down to 2.2.

A strong performance in both the alternatives and private equity portfolios that we have in the business which we've grown actually in the last year as well. And we're comfortable with the overall positioning in terms of risks of the portfolio as well as the performance that we saw delivered the strong 3.2 for the year.

With that, I think we're going to turn back to Elena to help manage the Q&A. Thank you very much.

Thank you very much, John. We will now open the lines for questions.

If you would like to ask a question, please use the raise your hand button on Teams. I will be able to see who has raised their hands and calling you one-by-one.

When it is your turn to ask the question, please don't forget to unmute yourself. And equally if you can turn on your camera, we would be really happy to see you as well.

So let's see whether we have any questions coming. Please use the raise your hand functionality.

I'm not seeing any questions so far.

This is Thomas Henka (ph), I am speaking. I raised my hand.

Can you just see that? No?

No. I seem to be having some problems, but please go ahead, Thomas.

Okay. Thanks very much.

I want to wonder what you can tell us about the exposure that Swiss Re has in Ukraine conflict and on the sanctions on Russia. How and in what sort of business lines are you threatened there?

And maybe an add-on and how would that buildup in the investment losses, for example, on bonds with Russian borrowers, and things like that? Thank you.

Thomas, maybe if I could answer the question also because I'm not sure I was precise in an earlier discussion I had this morning. I think on the investment side, we have immaterial exposure, almost nothing directly invested in the Ukraine, and a small amount related to Russia immaterial for the overall portfolio of investments.

We write some restricted lines of insurance in both countries. We don't believe that we are in any way particularly exposed for losses in these countries.

We will see how things develop, but we're not overweight in any sense, and the lines we do right there have been restricted for some period of time. The, also unfortunate, reality is at least within the Ukraine, you could imagine that war exclusions are going to be relevant for some of the losses that are suffered by the population and businesses there.

So I don't believe that we've got any outsized or particularly dramatic exposure on the liability side, and almost none on the asset side.

Thank you.

Thank you, Thomas. So I see a raised hand from a Johannes Tauber.

You can go ahead now.

Thank you very much. Maybe I'll follow up to the Ukraine question.

Can you give a number what you think what the loss might be look like? And then, maybe some -- one question on the CorSo and normalized combined ratio.

Could you say something about what exactly -- why exactly it has to be normalized? Thank you.

No one is happy to try. We don't have a precise number, as I said on the asset side, zero direct exposure on the Ukraine and a truly immaterial exposure with [Indiscernible] just from fixed income assets, investments in Russia.

On the liability side, we do have some very modest exposure in both countries. It's impossible at this point in time to under -- to gauge whether there will be losses and if those losses are in fact relevant to the policies we've written.

But again, this is not -- we -- I don't see a situation where this, at least today, would be anything dramatic or material, and new year's earnings for us. I think the -- I apologize.

On CorSo, the moves we make for the adjustment from actual reported to a normalized number are two fold. One, which is a removal of what had been a very positive reserve situation.

We found that we simply have redundant reserves which were not justified to hold in the business and so that was moving us up from the 90.6 -- above 95. We actually then adjusted for what was a higher-than-expected nat cat loss between the Texas storms, Hurricane Ida, and the tornadoes in the United States.

Almost all these were U.S. -based losses.

Some losses related to the storms in Europe. But that combination then brought it back down to 95 on a normalization.

So those two are large removal of the redundant reserve and a smaller reversal of the larger-than-expected nat cat impact land back to this normalized number.Thank you.

Alright. We'll take the next question from Ben Dyson.

Go ahead, Ben.

Okay, great. Thank you very much.

Can you hear me okay?

Yeah.

Okay. Great stuff.

I just wanted to ask with regards to the Life & Health 's property expansion and expectation for 2022, what COVID loss assumption you'd built into that and what you're expecting for 2022? Also, a little bit smaller.

I was wondering if you could give a little bit more on why you feel confident to increase your nat cat exposure? It's timeline, when as you pointed out, it was all out [Indiscernible].

Thanks very much.

On -- the Life & Health exposure, as Christian showed, our Q4 U.S. losses were a fraction of the total booking we had in Q4.

We did have to include losses that actually incurred in Q3. We've been working with the team very closely to understand how we expect these curves to move.

Unfortunately, the first quarter losses or at least mortality -- excess mortality COVID associated in mortality in the United States remains significant. The total number that we have is on a pretax basis, approximately $600 million of expected losses.

That's based on the information we have today, we can't predict how this pandemic will work its way through. If the U.S.

comes close to a European level of mortality, that could improve modestly from our position. If for some reason there are other ways or other variance that come through in the second half of 2022, that could negatively affect it.

But right now with what we know today, this seems like a good estimate of future losses of $600 million pre -tax number. So that's the overall point and I apologize, I didn't write down.

I'll take the nat cat question. We really see this as our core competence to write nat cat.

We have a whole team of scientists, we have whole models, and I think we have a very good track record on nat cat. Obviously, there's volatility, but we have a good track record, and we follow the climate signs very closely.

And also important to say, I think I hinted at it even in years where the nat cat load is higher than what we expected like last year. We're still able to have a very positive combined ratio of below 80%.

So, the reason some people exit this is that many people in the market are dependent on buying retrocession, so reinsuring themselves, and the prices in these so-called retrocession market have gone up more than in the market -- than in the reinsurance market. So, it becomes uneconomical uneconomical to do that, but Swiss share is very large balance sheet.

And so we're, we're not dependent on the prices of the retrocession markets to write good business. And then finally, it also depends what kind of a balance sheet you have, we have the luxury of having not just a very diversified P&C balance sheet, we also have Life & Health in the whole mix, and that allows us to bring capital costs down way more than if you were more specialized on niche player in the nat cat era.

So I think all of these factors combined give us a unique advantage in the nat cat field.

Thanks very much.

We'll take the next question from Cynthia Chong. Please go ahead.

Hi, thank you. Can you hear me?

Yes, we can. Thank you.

Great. Thank you very much.

Some of the questions have been asked by other journalists, I appreciate that. You said you have very limited, almost immaterial impact from the Russian and Ukraine crisis but just coming back to that.

You said you had restricted insurance business in both countries so I just wanted to know a little bit more what sort of business lines and business segments they are. And what happens with government sanctions against Russia so if governments asked you to do something, how would the sanctions affect you as a business?

Would you have to close down policies from your Russian policyholders? I just wanted to know what will happen and what would you do and what risk management do you have in place to prepare worst-case scenario if the situation worsens.

My second question is coming back to -- I asked -- I know -- since you already announced that you will adopt IFRS in 2024, and I know Christian said earlier on, you are in the middle of modeling, could you give me a little bit more details about how you're dealing with the implementation of IFRS 17? What sort of challenges do you see?

And given that you have a year from your European counterparts because most European ensures you will have to adopt in 2023, I'm just wondering to see what you're hoping to learn from your -- from the early adopters. Thank you.

Back to the Ukraine, Russia story. Again, on the asset side in material, some restricted lines of business, as I said, to both countries, we don't normally disclose the level of detail of specific lines or specific exposures, but we're -- as I said, we believe we're not in any way overexposed in either country.

We don't have real -- any indication of what losses might or might not occur. And as I said before, some policies may be protected at least with respect to the Ukraine on war exclusions on Russia.

It's very difficult to judge what hypothetical sanctions might mean for exposure. We do have our risk management team evaluating those exposures and we'll continue to update our own view on that.

But for the moment, I can't really say anything more for that. On IFRS, you correctly identified that we are migrating from U.S.

GAAP to an IFRS reporting in 2024 a year after most of our competitors who are already on IFRS are moving forward, that not unreasonably means that we've got a little more time to get everything lined up. I'd say one advantage we have is while we've been reporting under U.S.

GAAP, we've also been reporting on our economic value framework. And here we've shared with the world for the last dozen years a second balance sheet that's an economic base balance sheet that includes the economic earnings which in many, most years as Christian pointed out on the Life & Health business, show a stronger delivery of value than what is represented in the profit recognition on U.S.

GAAP. What we'll be doing over the next quarters is fully preparing ourselves to deliver the reported accounting earnings under IFRS and as we do that, we'll obviously have to re-create both the balance sheet, but also the earnings stream there.

We'll provide some additional information at our Investor Day of where we think those changes will be directed. We won't have numbers to share with you at that point in time as we are still more than a year-and-a-half away from the reporting period.

But I think we've -- we believe we have a fairly good understanding at least directionally of where things should be moving.

Thank you.

Thank you, Cynthia. We have a raised hand from someone, who joined via the phone line.

Unfortunately, I did not see the name. I see UK number ending in 3-5.

Please ask your question. Don't forget to unmute yourself if you're asking a question.

We cannot hear anything in the room. Is there anyone else who would like to ask a question?

Reminder to use the raise your hand functionality. So we see another question from Thomas Hangartner.

Go ahead, Thomas.

Thank you. Our questions goes to the iptiQ business.

You mentioned the upswing in volumes, but still in loss area, so what is sort of prospect you have to reach earnings, they're getting to net profit area, how many years will it take to reach that situation? And maybe you mentioned that there's an addition of 11 partners last year.

So what's the total number then? Thank you.

So, the 11 partners, I think bringing us up to 50 --

51.

51 total across the various geographies, a strong grouping. We continue to evaluate how new partners might be able to come onboard and the on-boarding actually has gotten much better, faster as we continue to roll both the P&C activities, but also Life & Health out.

With respect to break even, the issue is frankly, based on two factors. One is we do have some distinct businesses, the European Life, which we've combined the management with European P&C.

But the America's, these businesses are at slightly different stages of development. And frankly, the break-even depends a bit on the new business strain.

So perversely growing topline faster, will push out that break-even date. In general, we think it's a finite number of years before we come forward.

We think the growth that's anticipated for 2022 will continue to show a loss on an EBIT basis. We previously provided some guidance around plus or minus 200.

We saw a bigger number because of the strong growth in 2021 and probably the guidance would be adjusted upwards towards 250 in 2022. But we think that that will reduce in the following three years, and we will be approaching that break-even somewhere around 25 given the business mix and the anticipated growth we have today, that could accelerate or be pushed back by 12 months, I think but largely that's where we should be thinking that this business comes back.

Importantly, as I mentioned before, that top line is growing much faster than the expense line. We're able to continue to bring the business on at a contained expense and that allows us then to ultimately get to the break-even position.

Thank you very much.

Thank you. I will take a question from Vincent Hook now.

Thank you. On the investment side, you reported every usage of ETFS.

and I think its account -- that accounts for 23% of your equity exposure [Indiscernible]. so I just wanted to know what -- what's the rational there and what are the plans going forward in terms of passive investment strategies.

I apologize, Victor (ph). The line wasn't so clear, I'm not sure I understood the first part of your question.

Sure, yeah. I'll repeat.

I was referring to the usage of ETFS in the investment side on the investment strategy and I think it accounts for 23% of your equity exposure. So I just wanted to know what's the rationale of using ETFS on the investment side last year.

And what are the plans going forward for passive investment strategies?

I'm not sure where you're seeing that, but ETFs are not a big part of our equity investments. We've got private equity positions, which has grown.

We've got some of the equities that we do under what we call principal investments, which roll up into the total. But I am not sure if you've got a specific reference.

I'd be happy to, or we can subsequently come back to our Investor Relations team. I'm sure they can help answer that question.

Okay. I'll follow up then.

Thank you.

Thanks. Okay.

A reminder: If anyone else has any questions, please use the raise your hand button. I don't see any more questions at this time.

Then thank you very much everyone for participating. If you do get any questions later on, please reach out to media relations and a quick reminder that we will also be holding a Q&A session for analysts and investors at 2:00 p.m.

Zurich time today. And journalists can follow the session in listen-only mode.

Thank you. Goodbye.