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Operator: Good morning or good afternoon. Welcome to Swiss Re's Annual Results 2025 Conference Call. Please note that today's conference call is being recorded. At this time, I would like to turn the conference over to Andreas Berger, Group CEO. Please go ahead.
Alexander Andreas Berger: Thank you very much, and good morning or good afternoon to all of you. I appreciate you taking the time to join us today. Before our Group CFO, Anders Malmstrom, will walk you through the detailed numbers, I'd like to start with some brief remarks as usual. It was a good day. 2025 has been a successful year for Swiss Re, but also for all key stakeholders, our clients and partners, our investors, but also our employees. We have two priorities: first, delivering on our group net income; and second, increasing the resilience of Swiss Re to improve the consistency of earnings delivery over time. In 2025, we delivered against both priorities, also allowing us to increase our capital repatriation to shareholders. We achieved a record group net income of USD 4.8 billion against our target of more than USD 4.4 billion and an ROE of 20%. This result reflects disciplined underwriting, strong recurring investment income and low burden of large losses outside of the first quarter last year. At the same time, and this is equally important, we further strengthened the resilience of the group. We completed the Life & Health Re portfolio review, added to the current and prior year reserves in P&C Re, continued to increase initial loss assumptions well in excess of economic inflation and applied the uncertainty load on new business across the Swiss Re Group. In addition, we achieved more than USD 100 million of cost savings in 2025. Therefore, we're well on track to deliver our targeted USD 300 million reduction in the operating cost run rate by 2027. P&C Re and Corporate Solutions achieved an excellent result, supported by strong underwriting performance and lower-than-expected large claims. P&C Re achieved a combined ratio of 79.4%, well within its target of below 85%, while Corporate Solutions delivered a combined ratio of 86.5% comfortably meeting its target of below 91%. Just as a reminder, the 86.5% combined ratio for Corporate Solutions is calculated on a different basis than that of P&C Re, reflecting a gross revenue view and including all expenses. On a like-for-like basis, Corporate Solutions combined ratio would have been 80%. These outcomes reflect the actions we have taken in recent years to build the highest quality portfolio we've ever had in both P&C businesses. And against this backdrop, we entered the renewal for January 2026. The outcome was in line with expectations with no real surprises. We executed on our priorities: first, to lead with confidence in segments where we have differentiating value propositions; secondly, to actively manage our sub-portfolios to respond to the more competitive market, including prioritizing sustainable structures; and third, to grow together with our clients by offering solutions that address challenging concentration risks. Overall, while demand increased competition intensified, especially in nat cat. Although clients selectively increased retentions, Swiss Re selectively or successfully, I should say, preserved our share of wallet. Casualty prices were up, but we remain cautious even as our repositioning actions are complete. We expect similar conditions in the upcoming renewals, always obviously subject to loss activity. What does that mean in terms of numbers? On volume, we renewed treaty contracts representing USD 12.4 billion of gross premium in line with the business up for renewal. Overall, nominal pricing was broadly flat, with mid-single-digit improvements in casualty, offset by similar declines in property, particularly for nat cat covers. The gross premium volume developments mirror this divergence. At the same time, based on a prudent view on inflation and updated loss models, we increased loss assumptions by 4.6%, resulting in a net price decrease of 4.3%. Importantly, and I repeat importantly, terms and conditions remain stable. In addition, we reduced our external retro for nat cat at the 1/1 renewals, as flagged already at the management dialogue in December, thereby increasing our nat cat exposures. Now turning to Life & Health Re. In 2025, we completed the review of underperforming portfolios and took targeted actions to address related sources of volatility. The assumptions updates booked in the fourth quarter that impacted the insurance service results and CSM balance are in line with our guidance provided at the management dialogue. Despite all these actions, Life & Health Re delivered a net income of USD 1.3 billion for the full year. As a consequence, Life & Health Re is on a much stronger footing with clearer visibility on earnings delivery. This gives us confidence in achieving the increased net income target of USD 1.7 billion for 2026. And in Life Health Re's ability to be the stable earnings provider to the group, covering the majority of our ordinary dividend. Our earnings were underpinned by a strong investments contribution, with a return on investments of 4% and the recurring income yield of 4.2%, providing an important and stable contribution to our earnings. We've also made substantial progress on our decision to withdraw from iptiQ with all remaining parts now being either sold or to be placed into runoff in due course. Looking ahead, we confirm the financial targets we communicated at our management dialogue in December. For 2026, we are targeting a group net income of USD 4.5 billion, reflecting our confidence in the resilience of our business units, disciplined underwriting and active cycle management. In closing, I would really like to thank our employees for their strong commitment and hard work throughout the year 2025. I'd like to thank our clients and partners for their continued trust. And you, I'd like to thank you, our investors and analysts for your engagement and support. Now with that, I'll hand over to Anders to you for a closer look at the financial details of the 2025 results.
Anders Malmstrom: Thank you, Andreas, and good morning or good afternoon to everyone on the call. I will make a few remarks on the results we released this morning before we move to the Q&A. Let me start with the insurance service results of our businesses. P&C Re reported an insurance service result of USD 3.6 billion for 2025, significantly above the prior year level. The increase was driven by favorable experience variance, partly offset by lower CSM release, reflecting the earn-through of prudent initial loss picks, including the impact of the uncertainty allowance on new business as well as slightly lower margins. Experience, variance and other which captures deviations from initial reserving assumptions contributed a positive $698 million in 2025. This was primarily driven by large nat cat losses that came in USD 1.2 billion below expectations. Against this highly favorable backdrop, we further strengthened P&C Re's resilience by selectively adding to both current and prior year reserves. For the full year, we added about USD 200 million to current year reserves and around USD 100 million to prior year reserves in nominal terms. These prior year reserve additions are net of releases. We have substantial reserve redundancies on short tail lines close to USD 1 billion, which we recycled into longer tail lines in the form of IBNR reserves. This obviously benefits overall resilience. On the back of these actions, P&C Re reported a very strong combined ratio of 79.4% for the year, comfortably achieving its full year target of below 85%. Turning to Corporate Solutions. The business unit delivered another strong year, achieving a full year combined ratio of 86.5%, comfortably meeting its target of less than 91%. The insurance service result increased to $1.2 billion in 2025, up approximately $200 million year-on-year, primarily driven by higher CSM release, reflecting stronger in-force margins. Experience, variance and other was positive at USD 217 million, reflecting favorable large loss experience and a positive prior year reserving result, partially offset by reserve additions for the current year. Large nat cat claims of USD 148 million were below full year expectations, while large man-made claims of $351 million, were slightly above, partially offsetting the favorable nat cat experience. Finally, in Life & Health Reinsurance, the insurance service result was USD 1.2 billion in 2025 compared with $1.5 billion for 2024, reflecting the impact of detailed reviews of underperforming portfolios concluding in 2025. For the full year, the negative assumption updates related to these reviews impacted the P&L by around USD 650 million, of which approximately USD 250 million in the fourth quarter. This is in line with the guidance provided at the management dialogue. Both the full year and fourth quarter assumption update, we're focused on three markets: Australia, Israel and South Korea. In addition, adverse experience impacted the insurance service result by approximately USD 300 million for the full year with close to $200 million of the impact attributable to the market mentioned before. Despite these actions, Life & Health Re delivered a net income of USD 1.3 billion for 2025. While the assumption reviews also impacted the CSM balance, in addition to the P&L, the CSM remains robust at USD 17 billion, supported by prudently priced new business and favorable FX movements. On revenues, the group's insurance revenue amounted to USD 43.1 billion compared with $45.6 billion in the prior year, reflecting several key drivers that were already flagged throughout the year. As we have said repeatedly, we do not manage for top line. Earnings are what matter and the quality and resilience of earnings continue to improve in 2025. Moving on to investments. Asset Management delivered another year of strong returns with an ROI of 4.0%, in line with last year, reflecting a recurring investment income of USD 4 billion. In 2025, we benefited from the sale of Definity, offset by targeted losses within the fixed income portfolio. So let me conclude with capital. Swiss Re's Board of Directors will propose a dividend of USD 8 per share, representing a 9% increase, thereby delivering against our stated objective of growing the ordinary dividend paid between 2025 and 2027 by at least 7% per year. On the announced buyback, last December we added important changes to our regular long-term capital distribution policy, which focuses on growing the ordinary dividend and complementing this with a sustainable buyback that is linked to the achievement of our annual group net income target. Beyond this, we have been clear that we do not rule out the possibility of additional excess capital repatriation in the form of extraordinary buybacks. Today's announcement of USD 1 billion extraordinary buyback on top of the dividend and the $500 million sustainable buyback should be seen in that context. The $500 million sustainable buyback is here because we have achieved our group net income target. The additional USD 1 billion extraordinary buyback reflects all the key drivers. Firstly, we generated USD 4.7 billion of SST capital in 2025 despite the various actions we took to increase the resilience of the group, in particular on the Life & Health Re side. Secondly, the extraordinary buyback is consistent with our focus on managing this important phase of the P&C Re pricing cycle. And thirdly, the extraordinary buyback reflects our confidence in the overall resilience of the group, having successfully completed a host of actions across our businesses in the last 2 years. We expect to launch the buyback in early March with completion targeted by the end of 2026. Our announced capital actions today imply total payout of USD 3.9 billion or approximately 80% of our full year 2025 earnings. The group's SST ratio, including all of the announced capital actions remains at a strong 250%. That's where I will leave it for now, and I'm happy to hand over to Thomas to kick off the Q&A.
Thomas Bohun: Thank you, Andreas. Thank you, Anders. As usual, before we start the questions, if I could just remind you to limit yourself to two questions. Should you have additional questions, please rejoin the line. With that, could we have the first question, please?
Operator: Sure. The first question comes from Will Hardcastle from UBS.
William Hardcastle: Will Hardcastle from UBS. First one is just trying to really triangulate and work out where the starting point to think of the '26 combined ratio is. I wonder if you can try and help with some of that working out to the underlying, so we can compare it to that better than 85% bridging with the 3 points worse combined ratio from January renewal, that would be helpful. And then secondly, can you talk me through the rationale of buying less retro year-on-year and therefore, adding greater volatility? I guess it comes slightly in conflict to your added resiliency. So just trying to understand why that happened. I'm trying to think that presumably return on capital, I guess, the belly of the risk as well or is it just on the tail?
Anders Malmstrom: Okay. Maybe I'll start here. And I think your first question is the starting point of the combined ratio. And basically, I think what we've tried to figure out is what's the normalized combined ratio after the renewals, in a way and then where do you get that. And look, I think if we do that, I think we obviously have to normalize for seasonality, we have to normalize for the smaller FX and then incorporate the new information we have with the renewals, which I think we stated as being around 3% nominal. So in our view, this would bring us somewhere between 84% and 84.5%, somewhere there for the year. But I think this already incorporates all the prudent assumptions that we took. When you look at the -- our assumption that we increased the loss picks by 4.6%. That's significantly higher than inflation. So I think there's some, call it, prudency in. I think we have the uncertainty load. And then at the same time, we bring the -- we have all the expense actions. So I think this brings us well in line with the target also for 2026 to be below the 85% target that we have. I hope that helps.
Alexander Andreas Berger: On the retro?
Anders Malmstrom: On retro, yes.
Alexander Andreas Berger: Yes. I mean, I can maybe start there. I think we're not known to depend on retro. We have a strong balance sheet, and we believe and trust our underwriting. We were using retro historically, yes. But when we believe that the margins remain with us and that we can deploy the capacity that we have allocated to nat cat in particular, that situation occurred. And then we said, why not benefiting from it in-house. And I think this is something -- that is a strong statement actually for the underwriting that we have in the underlying quality of the book supports it. So we'll take decisions in future and weigh up whether or not it makes sense. On the other hand, it's also important from a capacity deployment perspective, not to add to the fire, fuel -- oil into the fire, because if you add more capacity in a rate declining an environment, you will actually obviously intensify the competition. And this would be counterintuitive for the stability of rate adequacy that we would like to achieve. So that's the context for this decision, and then we'll revisit it. But at the moment, we feel very comfortable with this decision.
Thomas Bohun: Could we have the next question, please?
Operator: Next question comes from Kamran Hossain from JPMorgan.
Kamran Hossain: I've got two questions. The first one is on the buyback. If I think back to December in the IR Day, I think, Andreas, you made quite a few references to the term, kind of the lemon tree, and I think you talked about sustainability, consistency and not wanting to squeeze the lemon tree too hard. How should we -- how should I interpret those messages that you were trying to give in December and the extraordinary buyback today? Was it just 2025 was extraordinary and therefore, don't think about it that don't plug that in or an additional buyback into later years because it simply is just an extraordinary set of circumstances? Or are you planning to squeeze things a little bit more? The second question is on Life & Health. So in the fourth quarter, obviously, you had the assumption changes, which were in line with your expectations. You then have some other kind of negative experience, variance in the fourth quarter. How comfortable are you that the kind of negative experience rate from kind of Q1 '26 just goes away completely? Should we -- is that what you assume and that's what we should assume?
Alexander Andreas Berger: Yes. Okay. Let me take the first one and second one. I can pass on to Anders on the Life & Health side. 2025 should not be seen as a new normal in the nat cat activities. We had a Q1 where we exceeded our budget, nat cat budget, but then we had a very benign rest of the year in nat cat. That's not the new normal. Exposures exposure can happen any time. And that is reflected also in the budget that we set up. We've got a budget of $2.1 billion for nat cat. And let's see. So this can happen any time. So what we wanted to do is really bring in that professional underwriting view from a technical perspective that we are managing cycles. Cycle management is what we do. And then we look at our portfolio and see what lines of business are correlating with each other, in particular, when we assume certain cycle developments. We see a decline in property in particular in cat. And as I said before, we don't want to fuel the fire by adding more capacity to a declining market. So the quality of the rates and the rate adequacy is really important. So in that context, you should see the comments that we did in December at our management dialogue. And if you now look forward into '26 and maybe even beyond, we will see maybe similar behavior in the '26 renewals. So let's see. But it just requires one big event, loss event and then the whole dynamics will change. And that's the message I wanted to get across. And that's why we said don't take this as a new normal. We don't want to squeeze the lemon now. We're managing expectations in the sense of what does the market say and what do the cycles tell us. So we want to create a lemon tree here, and that's what we did and starting and continuing to do, because we need to manage the cycles and the volatility. We've got a diversification benefit through Life & Health, which is helping. But I think within the P&C businesses, that cycle management is key, in particular, at the moment, applying disciplined underwriting.
Anders Malmstrom: Yes. Maybe just to reiterate back on Life & Health, what I already just said on the call. I think we really finished now all the reviews. I think we strengthened the reserves significantly during that review. And then we actually look where the volatility that we had, the negative experience where it's really coming from out of the USD 300 million that we had, USD 200 million came from these underperforming markets that we just strengthened. So I feel very comfortable now that after all that work that you will not see this adverse experience in the future years. And look, I think now we're going to continue to just do -- every year, we do the updates and go through the portfolios, and you will not see large movements because you do it on a regular basis. And of course, we can always have some volatility, but we feel very comfortable now that all the assumptions are set to what we have experienced and what we expect in the future years.
Thomas Bohun: Can we have the next question, please?
Operator: The next question comes from Shanti Kang from Bank of America.
Shanti Kang: So just on the prudence that you've added today, you mentioned the skew between shorter and long-tail lines. And I was just wondering if you could give us some color on what particular lines you address more heavily or if that was more evenly spread across risk lines? And then just on the renewals, I noticed that you offset some of the volume decline in property and nat cat with some gains in specialty and casualty. Can you just characterize the specialty lines that you felt were most attractive to grow? And also on casualty, which areas feature interest there?
Anders Malmstrom: Okay. So maybe I'll start with the first one and Andreas will take the prudence. And I think very clear that we had on the short-term business, we had releases of basically close to USD 1 billion, and we moved them over to the long term. And I think we evenly spread that. It's not that one particular line had a problem because we are not talking about problems here. We're talking about strengthening resilience. So this is not one particular line that got that. And I think it's important, this is all IBNR. This is all IBNR that we use to strengthen the resilience.
Alexander Andreas Berger: Maybe on the renewals, in particular, you said we were offsetting casualty by property by growth in casualty and some specialty lines. On the casualty, I can specifically say it was rate developments, positive rate developments. We are not -- we're still very conservative because we think it's still a market or a line of business where you have to apply prudence, not only in U.S. liability, but also in EMEA and Europe, where you don't want to pick up through the back door the U.S. casualty or U.S. liability exposures through European treaties. In Europe, particularly, the growth came from motor portfolios in particular on the casualty side. On the specialty side, I think overall, I think we were very happy with the lines of businesses. We're a bit cautious in the marine and energy space. We see very healthy situations in engineering, although competition is increasing in this line of business as well, so something to watch. And then the aviation market, we've seen positive price changes on a nominal basis on the adjusted risk-adjusted basis, it was almost flat. So that's the picture we can see at the moment. On the cyber side, I can say risk-adjusted, we don't see a very positive picture. So we've got slight decline. So we're very prudent there in the underwriting. And you see it in the market also that some of the players were also pulling back some capacity because we need to watch the rate adequacy.
Thomas Bohun: Could we have the next question, please?
Operator: The next question comes from Andrew Baker from Goldman Sachs.
Andrew Baker: The first one, probably a little bit of a follow-up on Will's question. But can you help me try and reconcile the 5% year-on-year increase in cat budget with your P&L losses to weather events have sort of increased 20% to 30% or so. Does this just mean that you're writing a lot of the incremental cat exposure in the higher layers? Or is there something else going on here? And then secondly, on insurance revenue. So I appreciate what you're saying on the focus on the bottom line, but it has been a pretty volatile top line in '25 and been quite difficult for us to forecast. I think you made the comment in December and correct me if I'm wrong, that you expect the group number in '26 to be broadly flat versus '25. Is this still the case? And I guess, is there any variation divisionally we should take into account?
Anders Malmstrom: I think the first question was more about the cat budget. So I think the nat cat budget increased, as you say, by 5% from USD 2 billion to USD 2.1 billion. I think the reduction in retro doesn't really impact the expected nat cat. So this is much more in the tail. So this is a capacity that we increased, but that's in the tail. So the expected nat cat should not really be impacted by that decision. So that's why I think it's, say, a natural increase of 5% of the nat cat budget to USD 2.1 billion. And second question?
Alexander Andreas Berger: The insurance revenue. I mean, look, there's a mixed items here. So we've got the earn-through of the casualty, U.S. casualty pruning. We had some individual items, smaller items, also on CorSo, for instance, the medex book, the medical expense book on the A&H side that went to AXA from the Irish MGA that we were underwriting. So those were smaller items, and they added up, obviously, to that number. And in terms of guidance...
Anders Malmstrom: Yes. I mean, we don't really give guidance in terms of revenues. But I think we mentioned many times that we don't manage to revenues, but you could probably see that the market generally grows with GDP or slightly above that.
Thomas Bohun: Could we have the next question, please?
Operator: The next question comes from Ivan Bokhmat from Barclays.
Ivan Bokhmat: My first question will be fully also going back to one of the earlier questions on the combined ratio development. I'm just trying to understand, as we look into 2026 and perhaps in outer years, so if 84.5% at the starting point, we can assume delivery on cost savings, but -- which is 1.5 to 2 percentage points, this still leaves a little bit of a balance that would push combined ratio higher unless we assume some sustainable reserve releases. And of course, given the buffers you create, this is not unreasonable. But maybe you could talk a little bit about that progression and how the balance sheet could be deployed at what time frame? And the second question, I wanted to ask you about renewals and the new business CSM and P&C Re. So we've had this year in '25, the growth was negative 5%. I'm just wondering maybe you could try to separate the FX impact within that and also perhaps suggest some view into 2026 of how should that be affected by the renewals?
Alexander Andreas Berger: Yes. Maybe let me just do here the intro, and then I'll hand over to Anders. Just on the cycle management piece. So you've got two elements, the cost obviously and then the loss ratios to look at. And cycle management, as far as the exposure is concerned, that's our day-to-day business. And we set the strong foundation now, the underlying portfolios are strong. And that's why we think we can manage those cycles very effectively. So with the bottom line view. Now expense management is becoming part of day-to-day business. We have introduced a philosophy here that we actively obviously optimize the setup of the group. That's what we did with the organizational effectiveness measures and also faster decision-making that translated automatically into expense savings, and we're going to continue there. I'm not going to talk about the productivity gains that we're going to get through AI because that is a new area, and we haven't factored that into our plans yet. So that's a general view. And then again, we are in an extremely volatile market. That's our business. So one big event can change the dynamics completely, and that would then lead automatically to a hardening of the market again. So I wouldn't rule out dynamics like that. Because the alternative capital that's coming into the industry also has to then experience the losses that are coming through. And we are a long-term player with strong balance sheets, and that's what we need to manage.
Anders Malmstrom: Yes. So maybe just back to your question a bit on the numerical side, on the quantitative side. So I think as we mentioned before, I think you're going to get a normalized combined ratio of below 85%. This reflects the prudence. So I think you can expect if everything else as expected that we're going to see reserve releases. And then on top of that, the expense actions, that will continue. This is not over in 2025. We took the first 100 this year, we're going to have another 100 -- and another 200 over the next 2 years. So that will help. And then, yes, I mean, prices will not always go down. So I think we feel very confident and comfortable that I think we will stay below the 85% obviously, upset any huge nat cat events that clear when we budget. But I think it's really the combination of prudent reserving, expense actions and then disciplined underwriting. And then on the new business CSM, I mean, the new business CSM will come out in Q1. I think that's when we come with the exact number. I mean you've got now all in for how much the renewals impact the combined ratio. So that's a good proxy. But the exact number we're going to provide in Q1.
Thomas Bohun: Could we have the next question, please.
Operator: The next question comes from James Shuck from Citi.
James Shuck: I just have to begin with just a couple of questions on some of the moving pieces in the combined ratio. So I appreciate the new business loss component is seasonal. However, the full year number is still a very large number. I think from memory, you were kind of guiding to around 1.5 to 2 percentage points as being the loss component and it's been 2.5% in '24 and around 3% in '25. So what's driving that? $500 million negative loss component is quite a large number in the context of the overall insurance service results. So just keen to get some insight into the outlook for that number. And also if you're able to just comment a little bit on the expense ratio, which went up from 4.8% to 5.4%. I presume that's just your ending front-loaded costs ahead of the reduction and efficiency program. And then finally, just on the group items, iptiQ now largely disposed or fully in runoff. I know you guided to sort of a $50 million reduction in the loss at iptiQ on an annual basis. But has that been accelerated in the period? The Q4 loss in group items was bigger than anticipated. So what was the iptiQ loss booked in Q4 and the outlook there, please?
Anders Malmstrom: Okay. Maybe I'll start on the first one. Again, I think your question about the new business loss component. And I mean, look, I think the way I think about this is, this is really driven by the prudent loss picks and you should then see that coming through positive variance going forward. That's really how I look at because we write profitable business. It's not that we don't write profitability. It's just the way you reserve for, it becomes onerous day 1, and then it releases over the -- to positive experience.
Alexander Andreas Berger: Maybe just on iptiQ, no, there's no acceleration. Just to remind us, we have first sold the P&C iptiQ Europe business to Allianz. And then we sold the U.S. Solutions -- the Health Solutions business that was, call it, a lead management company that we had. And then we were busy looking at the individual portfolios. So we had a remaining EMEA Life & Health book, but also the U.S. book, and we could successfully then conclude on the U.S. book. So that's also sold. And we have the remaining piece, the EMEA Life book. And here, we decided to send this EMEA Life & Health book into runoff. So that's going now into the normal runoff activities and manage runoff as we always do and see what opportunities occur in the runoff process.
Thomas Bohun: And so there's no change on iptiQ guidance, which we said should be at around minus $50 million in 2027. And to the question, in Q4, there is an amount of around minus $100 million related to the sales of iptiQ.
Operator: Next question comes from Chris Hartwell from Autonomous.
Chris Hartwell: A couple of questions, please. First of all, just going back to the Life side, and I think it builds an extension from Kamran's question earlier. If I look at the start point of 2025 and add back the experience variance, that gets me to a much higher number than what you are implying in your 2026 target. So I was wondering if you could just help me understand maybe some of the moving parts between, I guess, what we saw last year and that 2026 target? And the second question just really reflecting back on the renewals. Obviously, we've seen quite a significant reduction in price. You and I think many of your peers have confirmed that terms and conditions have remained stable. I'm just wondering what your feelings are about how much room there is or willingness there is for T&Cs to soften as we go through this year. And obviously, notwithstanding the fact that you have mentioned that the market is fairly balanced. But I just wondering really on your sort of the outlook for terms as we go through the year.
Anders Malmstrom: Yes. So maybe I'll start on the Life & Health side. And I think you're absolutely right. If I just take the experience out and add it back in, I think I get higher. Now I think when we discussed about that before, I think the CSM release was higher than what we expected, and that's what we were guiding for. And I think that's something we discussed. I think we clearly understand this is really driven by the assumption changes themselves, but also just management actions, BAU management actions like recaptures and so basically drove the CSM release up. And so if I normalize for that, I get back to a CSM release of in the range of 8% to 9%. And if I then back that -- to take that together with the non-repeat of the experience variance, I get back to the targets that we basically put out for Life & Health. That's really how to triangulate.
Alexander Andreas Berger: Just quickly on the renewals. Again, I can repeat myself. By the way, there's some good news. The broker reports all predicted a steeper decline of rates, and I think that didn't materialize. So that's the good news. So the market was still broadly constructive or professional actually because there's still demand, but in the negotiations, the reinsurers stayed pretty disciplined. And the rest will be seen for this year. I expect a very competitive market still, nevertheless. The next renewals are the 1st of April renewals and mainly Japan renewals. And again, Japan is a different market and different dynamics in the market. We had a good renewal last year, and we'll see what the renewal brings this year. And then we will have obviously the 1st of June, 1st of July renewals in the U.S. Those are the important data points to look at. First, I see still a constructive market. We'll have to see how the buyers' behavior is. The fact is that the buyers all need strong lead reinsurers. And you could see that the market share didn't reduce. So we didn't reduce our market share even though the absolute -- I mean, the pie was shrinking that people were taking more risk on their own balance sheet. That created another opportunity for us to go into software solutions, et cetera. But overall, we were not signed down. So they need still strong lead capacity, lead underwriters with the expertise that gives me comfort for the next renewals.
Thomas Bohun: Could we have the next question, please?
Operator: The next question comes from Iain Pearce from BNP Paribas.
Iain Pearce: So just on net operating capital generation. So the 21 points net capital generation this year, do you view that as a relatively clean number or a good starting point to use going forward? Obviously, there's a lot going on this year in terms of Clean Care, Life & Health review. But is that a good number going forward? And also, does that new business strain, the 0.5 in the increase in total capital include the changes in the retro very long, because it's the 1st of January '26, I think. If you could just clarify those two points, that would be great.
Anders Malmstrom: Yes. So look, I think this is a good proxy for the capital generation. So I think in general, that was, I think, the year think really showed more or less in certain areas, we obviously have the assumption changes. But other than that, I think it's -- you can expect -- I always guide to around 25 percentage points of net capital generation -- gross capital generation before repatriation. So that's a good proxy.
Thomas Bohun: And then the target capital that already includes the reduction in retro, capital requirement.
Anders Malmstrom: I missed that. Yes, that's already -- that's all reflected. Correct, yes.
Thomas Bohun: Could we have the next question, please?
Operator: The next question comes from Vinit Malhotra from Mediobanca.
Vinit Malhotra: I hope you can hear me. So my first question is just -- and apologies, a bit repetitive, but I want to be clearer from my side. The extraordinary buyback, if you could just please elaborate what conditions we should look at as triggers or a possible trigger for another such extraordinary buyback in the future? So that's my first question on extraordinary buyback. Second question is actually on the nat cat increased exposure. So just to be very clear, the fact that you have increased your net nat cat exposure probably had a favorable impact on the 3 percentage points of the nominal combined ratio. Is that a correct understanding? Are you able to give some idea of how much benefit that was from this strategy?
Anders Malmstrom: Okay. I maybe start again with the extraordinary buyback and maybe I just kind of emphasize what I said before. I mean you have the main part of the -- call it, on our capital return policy is dividend and sustainable buyback. That's the -- I would say that's the core. And then if we're in a situation where we have excess capital, and we don't believe that we want to and have the opportunity to deploy it with the right return, that's when we consider ordinary -- an extraordinary buyback. So you can't bake that in. So you should -- it's quantitative and qualitative, but that's really the way we think about it. And this was this year very clear, that is qualified.
Alexander Andreas Berger: Just quickly on nat cats question. Just to clarify, the renewals are growth. That's before retro.
Thomas Bohun: So the information on the slide is our growth, and we show you the impact just based on that. So any changes in retro are not accounted for in that estimate of...
Operator: The next question comes from Ben Cohen from RBC.
Benjamin Cohen: I had two questions, please. Firstly, just on M&A. Could you just sort of reiterate kind of what your priorities are there? And with regards to the deal that you announced last week, should we assume that, that will achieve the targets that you have for CorSo as a whole? Or is there anything that you want to call out there? And the second question was just on the return on investments going forward. Do you expect that, that yield will rise going into 2026? I just asked because I think there have been periods in the past, say, at the end of 2024 when you had a very high reinvestment yield and actually the sort of the ROI hasn't or didn't go up last year.
Alexander Andreas Berger: Let me take the M&A question. So our M&A priorities didn't change. We always were very clear to say we don't see at this stage any transformational M&A opportunities. But what we would look at is additions to the portfolios, and particularly in Corporate Solutions, we said that we are happy to add in the areas, we call them focused growth areas that are decorrelated to the property and cat cycles. And that, in particular, was credit and surety, and we were very open about this. Now we only do these bolt-on acquisitions when they really make sense. Here, we have the opportunity to add the portfolio that QBE wanted to discontinue or divest. And that, in particular, is a trade credit and surety portfolio, their global portfolio with a strong presence in Australia. Why is it so interesting? Within the trade credit -- within the credit and surety book that we have in Swiss Re, it added another nice diversification. So all-in-all, very positive. And we will continue to look into those bolt-on acquisitions if they make sense and if they are in the areas that help us to further strengthen the resilience of our liability portfolio, target liability portfolio.
Anders Malmstrom: And just on the investments, so just to reiterate what we have said. So the ROI itself was 4%. The recurring investment yield is 4.2% right now. And the reinvestment yield was 4.4%. So all pretty close to each other. And obviously, when you then calculate how -- over time, how this develops, yes, you bring 4.4% in, but the question is always how much actually goes out. And you can expect that this has very little impact. It should have a slight positive impact, but it depends what actually matures over time. So I would expect that to remain pretty stable.
Thomas Bohun: Could we have the next question, please?
Operator: We now have a follow-up from James Shuck from Citi.
James Shuck: I just had a couple more things, please. CorSo's revenues in the fourth quarter were very weak, with down 10% year-on-year. Just keen to understand that development, please. I also wanted to ask a question on the expense ratio again, which I think was answered last time. I just keen to know it went from 4.8% to 5.4%. Is that just a temporary jump? Does it go back to 4.8% in '26? And then just on your new CTO, I thought it was interesting what are the first priorities for this Chief Technology Officer?
Alexander Andreas Berger: Yes. Maybe I'll take the CorSo one and the CTO and then maybe you can elaborate on the expense ratio. Just on CorSo revenues, it's very simple. This is the portfolio of the Irish medex book, that was taken over by AXA. And this is -- to be concrete, it's $200 million. So that is sort of the decline. Otherwise, CorSo had some healthy new business opportunities, in particular in the differentiating propositions in international programs and alternative risk transfer. Those were the most attractive ones. On the CTO, it's not the Chief Technology Officer, because we already have a Chief Data and Technology Officer. It is a Chief Transformation Officer. What is this? We are in a transformation process. The company went not only on a cultural transformation, but also we were streamlining processes, increasing proximity to markets by delayering the organization. And we do have ambitions and concrete use cases also around Agentic AI. This needs to be embedded into the organization, cascade through the organizations from top to bottom. And I think here, we need specific focus, in particular, on execution rigor and delivery here so that we don't increase again, the complexity of the organization, which will end up in increased costs again. So this is the idea of this new role that we created. AI, but not only AI is really changing the way we organize our business and the way we process our business.
Anders Malmstrom: Okay. And then on the expense ratio in CorSo, I think we saw that increase in P&C Re.
Thomas Bohun: The question was on P&C Re.
Anders Malmstrom: I thought it was on CorSo.
Thomas Bohun: So in P&C Re, we have some one-off effects from year-end accruals, and it's always better to look at the full year number. Also last year, we had an impact under the first year of IFRS or some out-of-period adjustment. So we would suggest just to look at the full year '25 number as the basis.
Alexander Andreas Berger: Yes. We have seasonality in the cost, project costs, et cetera, that are then coming in late in the year. So that's the effect.
Thomas Bohun: Could we have the next question, please. We have time for one more.
Operator: The next question comes from Roland Pfaender from ODDO BHF.
Roland Pfänder: Two questions, please. First one on Life & Health. Could you speak about your CSM new business growth ambitions, let's say, if you strip out large deals, what would be the underlying growth target you have for '26, '27? Just to understand it a little bit better. I think it was flat year-over-year for the year. Second question on CorSo. Rates are coming down. Do you need to execute cycle management here? Or do you still see some growth pockets like specialty or other things, which might keep growing? That would be also interesting.
Anders Malmstrom: So on the growth ambition, for Life & Health, maybe before I talk about the ambition itself, I think we have a very strong in-force business here. And the in-force itself brings us sustainable kind of new business. And I think you saw that kind of without any large transactions, we were actually able to sustain the new CSM just through new business CSM. And that's really the core here. That's important. And that's what we want to maintain that make sure that the in-force produces the new business itself. And then on top of that, we're always looking at transactions. If they make sense, they have to make financially sense. Otherwise, we pull back, but that's in a way, the upside, but the in-force itself allows us to keep the CSM flat.
Alexander Andreas Berger: Yes. So on the CorSo side, in addition to rigorous and disciplined underwriting and cycle management, there are obviously business opportunities, in particular, when you look at geographical opportunities. And we try to optimize -- continue to optimize the setup. We partner where partnerships make sense. We have a very well-run joint venture in Brazil and in those kind of emerging markets, you could expect maybe also some partnership models that we would do rather than planting the flag and have from scratch organic growth opportunities. So this is something that the team is looking at. But in particular, we're looking for expansions in the differentiation that we have in international programs and alternative risk transfer. Alternative risk transfer, why? Because like we discussed it for the large cedents, the primary insurance companies who take our premium from the market, that same phenomenon happens with large corporates. They take on more risk on their balance sheets and they create their captives. And with the captives, we have a leading position in managing helping captives at the fronting before the captive and within the captive and behind the captive with capacity, reinsurance capacity. So it's a unique one-stop shop proposition, which is very successful.
Thomas Bohun: Thank you, Roland. With that, I would like to thank you all for your interest, for your questions. Should you have any follow-up questions, please do not hesitate to contact any member of the IR team. Thank you again. We wish you a nice weekend.
Operator: Thank you all for your participation. You may now disconnect.