Talanx Stock

Good morning. Good morning, and welcome from Hannover. We are here at our little studio at HDI Platz in Hannover. And thank you for the time you're spending with us this morning to go through our numbers for the second quarter of the financial year 2026 and the first 6 months of the financial year.

I'm next to my CFO, Jan Wicke, who will, as always, take you through our numbers in more detail. And after his presentation, we are happy to answer all the questions you have in relation to our numbers. We are on MS Teams today. So if you want to pose a question to us after Jan's presentation, all the supplementary information material to our presentation is published on our website, including, but not limited to, our comprehensive financial data supplement.

And with that, I hand over to you, Jan.

Thank you, Bernd, and good morning, everybody, and thank you for attending our earnings call. I'm glad to provide you with some insights how Talanx has performed during the course of the first 6 months. And to start with, we were able to achieve a net income of roughly EUR 1.5 billion after 6 months, which is the highest result in Talanx history. And even better than that, we have record results in each and every segment in all the four of them.

52% of our profits were derived from primary insurance, 48% from reinsurance. So this is a well-balanced mix. And this has driven our confidence to increase the guidance already after the second quarter. We now expect to deliver a net income significantly above EUR 2.7 billion for the full year. As usual, let me start to provide you with an overview about top line and bottom line.

Top line, we were -- insurance revenues are stable in euro terms and currency adjusted, we are growing by 3%. The net income is up 9% to EUR 1.5 billion. And the high profitability of our business is displayed in a return on equity of 21.5% and the slight decrease in the return on equity on this outstanding level is driven by a higher equity, which I will explain later a little bit more.

Looking at the top line, where is the growth derived from? Primary insurance is growing currency adjusted by 4%, reinsurance by 1% and this combined then to a currency-adjusted growth of the group of 3%. And the bottom line, with regard to the bottom line, primary insurance was able to increase their contribution to the group net income by 12% to EUR 780 million. Reinsurance is up 7% to slightly above EUR 700 million. And for the group, this adds then up to EUR 1.499 million to be precise in the numbers for the half year.

Looking at the diversification in the group, there has not very much changed. So we are very well diversified with regard to both top line and bottom line. On the left side of the chart, you see the split of insurance revenue, which is very well diversified throughout the world. And on the right side, you see the earnings contribution by segments where we also have a nice diversification.

Looking at one source of our results is the development of large losses. And there, we want to draw your attention to the fact that we have had a very benign first half year with regard to large losses. So far, we have just reported losses of EUR 942 million. We have booked, as usual, the higher of large loss budget or reported losses. So we have booked EUR 1.4 billion in our account. This means there is a difference of EUR 474 million and which would translate into a net income effect of EUR 265 million. So a very benign large loss development during the course, but not yet reflected in the bottom line numbers. And obviously, this drives also our confidence to increase our guidance to significantly more than EUR 2.7 billion for the full year. This would translate into a return on equity of slightly above 19%.

Let's dig a little bit into the segments. And as usual, we start with Corporate & Specialty, HDI Global. With regard to the top line in euro terms, we have a decrease of 2%, currency adjusted, we are nearly flat, above EUR 5 billion. The group net income despite a super prudent accounting is up 7%. We have very strong technical results, which is reflected in the combined ratio of 90.7%. And we have a growing investment income, which is driven by that we have sold in the past some fixed income with lower coupons and bought some with higher ordinary income. And so we see a growing investment income here as a second driver of the earnings increase. Return on equity stands at 16.5%, and we are very, very confident that this segment who is really performing very well, will deliver a return on equity in this area also for the full year.

Coming to Retail International, which had an outstanding first half year of 2026. Here, we see in euro terms, a growth of 9%, currency adjusted even above 10%. For the first time, they have already achieved more than EUR 5 billion insurance revenue after the first half of the year, and we now expect them to hit the EUR 10 billion mark by the end of the year in this regard to insurance revenues. Even a higher growth rate is seen in the bottom line. The net income is up 16% to EUR 387 million. And the drivers of this with the really outstanding development is a very strong technical result with a combined ratio of 91.2% and also rising investment income, which supports the profitability of the segment. The return on equity stands at 20.8%. And even if we adjusted for the buyout of the Polish minorities at the beginning of this year, then it's 19.9%. This is a really very good number for retail business. And Wilm Langenbach and his team, they are really proud on what they have delivered so far.

Coming to our smallest segment, Retail Germany, which accounts for slightly below 7% of the overall net income. With regard to the insurance revenue, we would have expected a stronger decrease of the numbers. But given that they are quite successful in the distribution in non-life and also in the other life areas, it's just a decrease by 1% despite the fact that we had compensate for the end of the Targobank agreement. The group net income is up 19% to roughly EUR 100 million, and this is despite the fact that they had EUR 15 million large loss budget overshoot. And in this segment, then we have booked the reported large losses. And this translates also in a combined ratio of a very good 93%. Return on equity stands at very good 13%.

Coming to our biggest, by far, biggest segment, Hannover Re, the reinsurance. Here, we have a decrease in insurance revenue of 3%. Currency adjusted, we are growing close to 1%. The group net income contribution to the Talanx Group result has been increased by 7% to more than EUR 700 million. And this is driven by an outstanding low combined ratio of 83% here. Our return on equity stands at 21.9% as most of you might have listened to the call of Clemens and their colleagues, I do not have to comment further, but it's -- Hannover Re is constantly delivering good results.

Coming to capital management. With regard to the solvency ratio, we are standing at 2.46%. So we have a very good solvency situation. The net income development, as I already told, was very pleasing. We have an increase of the net -- sorry, the net income development. The equity development is very pleasing. We have an increase of the equity despite paying a dividend of EUR 930 million by roughly a little bit less than EUR 1 billion. So overall, from a shareholder perspective, we were able to create roughly EUR 1.9 billion value through the first half of 2026. This translates into more than EUR 7 per share.

Also, we see a very good development in the other shareholders' capital components. So overall, if we add to the equity, the CSM and the risk adjustment after minorities, after taxes, then this adds up to roughly EUR 23 billion for Talanx as a whole. So this is not too bad.

Coming to the investment portfolio, we can report that we haven't changed a lot. So we are still predominantly investing into fixed income. More than 80% of our assets are in fixed income and out of that, more than 90% in investment grade. So it's a low better investment portfolio approach, and we added some other asset classes, which are on the pie chart on the right side of the chart in order to achieve a little bit yield pickup here overall.

Nevertheless, looking in the accounts, you will see that we have increased our investment income quite substantially. The investment income for owners is up 15%, return on investment, 40 basis points. and the finance and investment result, which also takes into account the unwind of the claims reserves is even up 21%. And what is reflected in this development is, and you are all aware of it, in the last year, we have sold fixed income with low coupons out of the low interest rate phase and bought some new fixed income for it with higher coupons. And therefore, we have now a higher ordinary investment income, which we can report and which flows here through the results of the Talanx balance sheet.

Coming to our outlook. Overall, we are pretty, pretty confident with regard to the Talanx business model. And looking at the businesses model in more detail with regard to diversification at the beginning of the presentation, you have seen our split of revenues and earnings. So we are very well diversified. We have a P&C focus, more than 80% of our business is in P&C. And looking at the quality of the portfolio, I just want to draw your attention that we are always booking the higher of large losses incurred and reported and the large loss budget, and we have booked the budget. And despite the fact that we have booked the budget, the combined ratio is below 90%. So we have a very high quality in our P&C book. Thirdly, we are a cost leader. And I may draw your attention to the appendix of this presentation.

On Page 31, we have updated our cost advantage towards the peer with the year-end figures by 2025. And there, you can easily find out that we have a significant cost leadership compared to our peers, and this gives us a competitive edge in an increasingly competitive market.

And last but not least, we are all living in a world of uncertainty. And therefore, it's really useful to have a lot of resiliency to cope with this uncertainty. And as you are also well aware of, we have a super strong balance sheet, and this drives also our confidence with regard to our outlook. We now expect to deliver for 2026 significantly more than EUR 2.7 billion net income, and this translates into a return on equity from slightly above 19% for the full year 2026.

And with that, Bernd, I hand over for you for the Q&A.

A

The first question comes from Kamran Hossain from JPMorgan.

Congrats on a record first half. The first question is probably something lots of people going to ask about, but the guidance outlook is very good. Can I just ask -- this time last year, you increased the guidance -- so that went from EUR 2.1 billion to EUR 2.3 billion. So you were confident enough to put a number on it this time last year and then it increased again in Q3 last year.

What's driving your -- not reluctance, but what's driving the rationale to not give another number at this stage in the year? Is there anything behind that? Do you think the upside is probably even more than we might have seen last year? So just interested in kind of what does significant mean and why didn't you put a number on it this time around?

The second question is, when I look at the earnings, clearly, investment income was a benefit and you've highlighted that in the slides. How much of the beat versus being significantly above EUR 2.7 billion is sustainable into 2027? I think quite a bit of it will be, but just interested in your take on that.

Okay. First, with regard to the outlook. First, I have to admit, it is very unusual that we already reassess our guidance after the second quarter. As you are all aware, the third quarter is a hurricane quarter with the largest consumption with regards to large losses. And so we have a lot of confidence that we have already increased above EUR 2.7 billion or significantly above EUR 2.7 billion at this stage in the year.

We will reassess our guidance after the third quarter when we have more knowledge about the usage of the large -- what has happened with regard to large losses in the third quarter. And then we can put that into comparison to our large loss budget. In the current outlook, obviously, it's included a full consumption of the large loss budget for the full year despite the fact that we have a huge buffer if you look at the numbers after the second quarter. And I just want to highlight also, we haven't said above EUR 2.8 billion. At the current stage, we feel comfortable to say clearly or significantly above EUR 2.7 billion. And we will reassess this after the third quarter, and then we will also deliver an outlook for 2027.

Second question with regard to the investment income, how much is sustainable in this investment income? I believe the higher coupon, which we see in the ordinary investment income is sustainable. And let's assume the following. We have not a very high large loss consumption in the third quarter. Let's just assume it for a while. Then it could be also used to realize a little bit more hidden losses on the bond portfolio in order to ensure that we can show earnings growth also in the years to come. So this is also in our mindset on how to steer year-end results. And this comes down to our priorities.

The first priority for Talanx is dividends always up, and we will deliver on that one. The second priority is we want to provide our investors with earnings growth with lower volatility. And this is what we always keep in mind when we are steering our results.

So next in line is Hadley Cohen from Morgan Stanley.

I think Kamran has asked the key question already. But if I could just ask on the C&S combined ratio, I mean, you're still building buffers there, I think, but at a slower pace than you were, which means more is flowing through to the combined ratio and the bottom line. How should we think about the outlook from here?

Are we basically -- are you basically saying that because you're building buffers at a slower pace, incrementally the combined ratio should continue to get better from here? Or should we assume that the slower pace of buffer build is effectively offsetting pricing pressure that you're seeing in those lines, so the combined ratio remains broadly stable. So that's my first question.

Second question is on Retail International, please. So very strong around 10% top line growth there. Can you give us a sense of the mix of volume versus price in that respect, please? And just to get a sense of the sustainability of the growth trajectory there?

And Jan, you've been very useful in the past with respect to giving us some guidance around full year earnings for this division and what have you now the restructuring costs are largely behind us from the integration of the acquisition. Is the first half print, for example, a good proxy for something that we should extrapolate into the second half? And is the sort of volume growth a good indication for the earnings trajectory from here?

Yes. Thanks, Hadley. The first question was with regard to the resiliency development and combined ratio development at Corporate Specialty. Obviously, we try to deliver a stable combined ratio through the cycles. And in this area to have a combined ratio below 92% is already a good number. We shouldn't forget about that. We are currently in a very benign environment, but this is also already a very good number.

With regard to the resiliency building, I come back up something with what Christian and [indiscernible] said. There are 3 phases of resiliency building, strong resiliency building, what you have seen in the last year. Then there is mid-building -- a little bit building of resiliency. This is what you should expect for the current year. And then there is a phase where there's no resiliency building. But I want to ensure you we are still building some resiliency, not at the level of 2025. So it's not too bad.

So second question was with regard to Retail International, which had really an outstanding development in the first half of the year. And you asked for mix and volume and should provide you a little bit, I guess, some more color on where the growth was coming from. Looking at the first half of the year, the growth was derived from Poland, from Brazil, from Mexico, from Turkey. That are the main growth drivers in the [ HI ] portfolio. The markets there are also -- there's a little bit balance in the markets in terms of softening and hardening from the markets.

My view on retail business is if you deliver a combined ratio around 93%, you're already very good in the retail business. So -- and they are now currently outstanding very, very good. Should we -- what is the earnings trajectory for Retail International? So if we look at the current run rates, that looks really very pleasing. Obviously, we will try also to manage the earnings volatility in the segment. So I'm a little bit reluctant to multiply it with 2.

As usual, also if you look at the Talanx history in the last year, the second half year was always a little bit weaker than the first half year. Keep that in mind. We are a little bit trying to steer the results here. But the underlying trend of what Wilm Langenbach and his team is doing is very good. And you are absolutely right, we are behind the curve with regard to the cost for migration. They are achieving and working on cost advantages here. And the cost advantages, they will provide us with a competitive edge, which will be also useful for the years to come. But we will provide you with some more insights on the outlook for 2027 in the next quarterly call as usual, when we provide you with the full year outlook on 2027.

Next question from Michael Huttner from Berenberg.

Congratulations, like seriously congratulations. You must be very happy. Just on Germany, so top line beat in a funny way. I just wondered if you can talk a little bit more about that. And then the EUR 15 million kind of excess large losses, when I spoke to a wonderful IR team, they said it was mostly SME claims. So I'm just wondering, is it like what I would call recession claims when you have an insurance policy, you can virtually -- you can transform it into cash by having a claim.

And then the -- I may have a third one. So top line currency adjusted 3% in H1, you're saying you're still maintaining the 5%, I mean, kind of 5% for the full year. And just doing the math, it would imply 7% in the second half. Where would that growth come from?

So to start with Germany, top line development. So it's -- we had to compensate in the first half year roughly for EUR 80 million insurance revenue of TARGO. And if you see this minus -- minus 1%, and then you really can see that we have growth in the other areas of Retail Germany, and it was above our own expectations.

With regard to the large losses, well, there have been higher claims. So I should follow your idea whether there's anything that it doesn't seem to be fraudulent. So it's normal delivery in the property lines, and we have had these losses and we are delivering to our customers. This is key to us.

And the third question was on -- pardon me, the third question, Mike, could you repeat it please?

Top line. Good top line. If you maintain the 5% for the year, it means you're expecting more in the second half.

When we are talking about mid-single digits, then we have a range in between 3% and 7%, and this might be below the average, 3% to 7% despite the fact that we see some nice developments in both reinsurance and also in Corporate and Specialty and particularly in Retail International.

Chris Hartwell from Autonomous with more questions. Chris, what's on your mind regarding our numbers?

I mean, first of all, can I come back to, I guess, really Kam's question just on the net income target. I mean it's interesting that you've changed the phrasing around the net income target for 2026, but the return on equity target is unchanged. And so if I do the sort of the math around that, I mean, 19% ROE is just above EUR 2.7 billion if I assume that sort of the June 30 shareholders' equity is a good proxy for average across the year. And 20% would be, I guess, close to EUR 2.9 billion. So I'm sort of wondering if you can sort of help me, I guess, with the phrasing of around 19%. So I guess the around bit on the ROE guidance.

And secondly, just coming back to the cost leadership point you were making. I guess how defendable do you think that is, particularly with the industry trying to embed AI and various other sort of efficiency mechanisms across the industry? Do you think that's sustainable? And just related to that as well, Retail Germany, I guess, is the missing piece on that sort of clean sweep of cost leadership across the group. So I'm intrigued to know why you don't have a cost advantage there. And if I can sort of sneak just a little third one in as well. There hasn't been a great deal of talk on dividend. I appreciate the message you gave in Q1.

But again, if we could have a little bit of thought around sort of dividend sort of outlook. And particularly, I guess, how you sort of think about dividends as cycles get more challenging sort of obviously, solvency isn't related entirely to top line growth, sort of more exposure. But presumably, the ability to deploy capital is going to become more challenging both in C&S and in reinsurance. So can we expect further acceleration of dividend over the next few years?

Well, thank you, Chris. Let's start with the net income target, and you have very well calculated above EUR 2.7 billion net income and assuming the equity, it's above 19% if you do the math there. We haven't adjusted this around 19% because in our calculation, it's not yet above 20%. So this is why we have left this unchanged.

Second question was on cost leadership. And therefore, I think I go to Page 31. I hope the colleagues can -- yes, there we are, see to go to Page 31. And I hope it's displayed it now for you as well. What you can see here is that we have quite significant cost advantages compared to our peers. And this is very difficult to achieve. And I believe that AI obviously will accelerate the way how cost saving is done, but it will take some initial investments first. And we are starting from a better position in this race to make use of AI to become more cost efficient.

Will AI always drive cost efficiency? I'm not 100% sure on that one. And let me exchange my ideas on that one, why I'm not 100% sure. Let's assume that in the past, you need to make 3 offers to clients in order to achieve one contract. With AI usage on both sides with the broker side or customer side and on our side, there may be a future where you have to send out 10 offers to achieve one contract. So the volume which needs to be covered in the operation may increase due to AI. And therefore, the efficiency of the processes will be even more important. So I'm confident that we can keep our competitive edge on costs, and we are starting, as you can see, from a better starting point compared to our peers.

On Retail Germany, your question, why don't you have cost advantages in Retail Germany? I think given that I was in the very past 7 years ago, I was also CEO of Retail Germany. Let me provide you with two insights. First, with regard to the P&C book, it's a little bit a question of scale. And we had to modernize our IT system, which is done now, and we are already seeing very good progress that we are already on average costs with regard to the P&C book.

With regard to the life entities, there are ongoing migrations to get all the life entities on one IT platform, which will then provide us with cost advantages towards the average market, too. This will take us another 2, 3 years. But as the colleagues around [ Jenswagen ] team, they are working consistently on that one. So we will improve our cost position also in Retail Germany because we believe cost leadership is really key in the markets we are in.

Last question, Chris, was on dividend. And I just want to repeat what we have promised. We have promised a dividend of at least EUR 4. And I said well above EUR 4 last time. This is what I would expect. And the solvency is very good. And I'm really not at all concerned about the capital base. I do expect that we will deliver on dividends up also in the years to come.

So then we have questions from Iain Pearce from BNP Paribas.

Sorry, I was just going to try again on the net income point. Just because the regulator for a significant deviation assumes a 10% move, and that's the requirement for a preannouncement in Germany. So when I see the word significant, I sort of immediately jump to 10%. Is that not what you're trying to tell us with that word? I just wanted to clarify that.

The second one was just on the run rate growth in German top line, that looks to be significantly ahead of the guidance for the full year. So just wondering if you want to revisit that? And then also just on Germany, just to clarify, the larges losses, were they 15, 15 above budget or 15?

Okay. First, with regard to the net income, just to repeat what I've already said, we haven't said above EUR 2.8 billion. We have said significantly above EUR 2.7 billion. This is what we see as of today. After the third quarter, we will reassess our guidance in the light of the hurricane season and the large losses, which have been occurred during the course of the third quarter.

Second, with regard to the run rate in Retail Germany, we are maybe a little bit defensive here. The development in the first half year was really good at Retail Germany. But there, we are a little bit defensive. It could come out slightly better than initially projected. This is what we expect here. Does this answer your question?

Yes. And just the clarification on the large losses, I think that the number is 15 or 50 because it's quite underlying...

In Retail Germany, it was 15, above the budget and the main driver are 3 fire claims where small plants of SME business is burned down.

Roland Pfäender from ODDO BHF.

I would like to come back to Retail International. I reported very strong revenue growth. Nevertheless, quarter-over-quarter, it came down, I think, from 12% to 8%. Is there anything you could point at?

Secondly, could you comment a little bit on claims inflation in Retail International and what you see here? And maybe you could also compare it to C&S. Is it a different momentum, for example? Then regarding Retail International, I think you have a target to increase your non-motor business over the years. Maybe you could provide an update to this target.

Okay. So first of all, with regard to the revenue development, what we see in the revenue development is this right, a little bit the very strong growth of the first quarter came down in the second quarter was particularly driven by Poland. But nevertheless, Poland is still the main driver or one of the biggest driver of the revenue is the positive revenue development in Retail International. And the development in Poland is due to higher competition. So we've gained a lot of market share in the last 18 months in Poland, and this is the main driver.

With regard to the claims inflation, that's a difficult question to answer because claims inflation largely depends on the currency exchange rate in the various countries we are in. And therefore, it's always claims and price adoption, which you have to see in parallel when looking at those markets. And then obviously, the claims inflation in local currency terms in Brazil are different from Poland, are different from Italy, are different from Turkey. So I'm sorry that I just can't provide you a little bit more noise on that.

But overall, looking at the combined ratio, we are very happy the way we can adapt to claims inflation in our pricing so far. And the combined ratio of Retail International is really at a very, very good level. And with regard to the non-motor business, unfortunately, also the team, which is supporting me is currently short of this answer. But we will provide you the answer after we have analyzed it later.

Then there's a follow-up question from Michael, Michael Huttner.

Fantastic -- just pricing in Germany and motor. Motor is the most line I'm most interested in, but generally. And also, what kind of firepower would you have for deals looking out?

So with regard to motor, the pricing in the whole market is still very disciplined, and I would expect some more price increases due to the claims inflation. So a lower single-digit price increase is what I would expect, but we will see. So the renewal rate starts in October. So then after the third quarter, it -- I can provide you with more insights from the market because this matters for the market.

And with regard to deal capacity, so that's a difficult one. But we can -- I can give you EUR 5 billion as a number, which is feasible. But the question is whether we want to do a deal of EUR 5 billion or whether we rather would like to have a few deals in a lower range, but we do have the capacity to do the deals to capture opportunities when they are there. But these opportunities, they have to meet certain yardsticks with regard to return on equity, with regard to some other criteria, and we are very disciplined with that one. So it's -- and the reason for this EUR 5 billion, just to give some more color is that we also have lending facilities with the mutual. So it's not about having EUR 5 billion a war chest within Talanx, but we also can make use of some agreements with the mutual, which is willing to support the further growth of Talanx.

Okay. So then final call for questions at the screen. No more questions at the moment. So then Jan, I would ask you for some concluding remarks.

So first of all, thank you for your questions, and thank you for attending our earnings call. So overall, Talanx had a very good first half year in 2026. We have delivered record results. We have had a very benign environment with very low large losses. This provides us with a lot of confidence that we will deliver more than EUR 2.7 billion and significantly more than EUR 2.7 billion net income for the full year 2026.

With the next quarterly call, we will update our guidance, and we will provide you with the guidance for 2027. So thank you for attending this call.

Thanks, and bye-bye. See you soon.

Good morning. This is -- Hannover -- calling with our little video show live from our studio at HDI Platz in Hannover. We are here with the Talanx results call for the first quarter of 2026. I'm here together with Jan Wicke, my CFO, who will take you through the results and where we currently stand.

As usual, after the presentation, Jan is happy to answer all the questions you may have in relation to our numbers. We are on video today. [Operator Instructions] As usual, all supplemented documents, including, but not limited to, our financial data supplement are posted on our website under the IR section. And a replay of this webcast will be provided shortly after our presentation today thereafter, there too.

With this, I hand over to Jan. Jan, the floor is yours.

Yes. Good morning, everybody, and thank you for attending our call. It's a pleasure for me to give -- provide you with some insights on how Talanx has started into 2026. And yes, again, it's a quarter with some records.

First, we were able to grow our net income by 28% to EUR 774 million, which is the highest first quarter result in Talanx history. Second, we have a very high profitability, 22%, which is also the highest number, which we've seen in Talanx history. And finally, as usual, in the first quarter, we display the results out of the external review of our claims reserves. And Towers Watson, they have done their work, and they have stated that we are reserving EUR 5.9 billion more prudent compared to the Towers Watson best estimate. And this is an increase compared to the previous year of more than EUR 1.2 billion, which is a super strong number because at the same time, we were showing record results in 2025, and it's a clear indication that cost leadership pays off.

But let me now provide you with some more details on our number, and let's start with, as usual, with the big picture. With regard to the insurance revenue, we have a decline of 2% in euro terms, but currency adjusted, we are growing 3%. Net income is up, as I just said, by 28% to EUR 774 million, and this is driven by a very strong technical result and rising investment income. Return on equity stands at 22.3%. And the good news here is that all segments have contributed to rising net income or shown rising net income and very, very decent return on equities.

Looking at the top line a little bit more into detail. So currency adjusted, we have a growth of 3%, 5% currency-adjusted growth is seen in the primary insurance, 1% is seen in reinsurance, and this then combines to the 3% overall growth in the group. Looking at the bottom line, there primary insurance was able to rise net income by 13%, whereas reinsurance was able to rise it by 50%. But please keep in mind here that last year, Hannover Re was heavily affected by the California wildfire. So this increase of 50%, part of it is a normalization of the result. And if you combine those growth figures together also with group operations, then we have an overall growth of 28% net income in the group.

Looking at where the earnings are coming from, from a geographical point of view, which is quite important as we are a P&C company, you can see that only 14% of our top line is derived from Germany, 86% from the rest of the world, and it's well diversified throughout the world, which is important for us given that we are a P&C player. Second, if we look at the earnings engines or the segments in our business mix, there we can say that 47% of the profits are coming from reinsurance, 53% from primary insurance. So we are very well balanced here.

Looking at the first quarter in more detail, we want to draw your attention to the fact that the large loss development was really benign. On average, over the last 10 years, we've had a large loss burden of roughly 4.5% of the net earned premiums. In this quarter, it was just 2.9%. But as you are aware of our procedures, we are always booking the higher of already reported claims or the budget. In this case, we have booked the budget. So we have booked in our numbers, EUR 676 million large loss burden. What does that mean? We have a buffer of roughly EUR 390 million for the quarters to come for large losses.

All of this, the strong technical performance of the book, the large loss budget, which is unused, the rising investment income provides us with a lot of comfort with regards to fulfilling our guidance. It will be a little bit more demanding to achieve a mid-single-digit revenue growth, but we are confident looking at the renewals after the first quarter that we can achieve it. We are super confident with regard to the group net income, where we want to achieve a result around EUR 2.7 billion, driven by the strong results in the first quarter. And the return on equity, if you do the math with EUR 2.7 billion net income is around 19%.

Let me now provide you with some color on how the segments have done during the course of the first quarter. First, we always start with Corporate & Specialty. The revenues are down 2% -- 3% in euro terms, sorry. But currency adjusted, we can show a little growth with 0.3%. Group net income is up 8% to EUR 152 million, driven by very strong technical result. Combined ratio stands below 92% at 91% and also an improved investment income, which is obviously benefiting from the portfolio restructuring in the bond portfolio in the previous years. And the return on equity is at a very nice level of roughly 18%.

Coming to our growth and earnings machine, Retail International. The team around Wilm Langenbach was able to grow the insurance revenue in euro terms by 8% and currency adjusted even by 12%. The growth in the net income is also super strong and in euro terms, stronger than the top line by 10% to roughly EUR 190 million. And this is driven by technical discipline, which is displayed with a combined ratio below 92%, which is very good for retail business. And it's also seen if you look at the return on equity numbers, which are at 21.2% on a record level. It's still this one-off out of the buyout of the minorities in Poland. If you adjust for this effect in the equity, the return on equity would stand at also very favorable 20%. So a very, very strong result in the first quarter.

Given that we want to further grow Retail International and next to organic growth, which is displayed here in the chart, we are pursuing inorganic growth or acquisitions. What we did is we have strengthened our position with growth-oriented strategic alliance with Afirme in Mexico. The agreement has 2 components. One is a strategic 20-year distribution agreement with the Afirme Group, bancassurance agreement. And second, we will take over their insurance operations and combine them with ours in order to achieve some synergies. Overall, we expect to grow our market position in the Mexican P&C market from -- to #6 by doing that. And together with Afirme, we want to exploit the growth potential of this market.

Closing is expected in 9 to 12 months. So there won't be any impact for the 2026 numbers. There will be some restructuring effort in 2027, and we will display with the closing a little -- or we give you some more information with closing on the transaction. Overall, all financial yardsticks are met. So M&A discipline is still ongoing. What does that mean? Double-digit return on equity is expected on the investments here plus risk premium for Mexico. And we will continue to grow our business not only organically and also inorganically.

Coming to the smallest segment within our group, Retail Germany, which accounts in this first quarter for 8% of the net income of the group, the insurance revenue are down 3% which doesn't come as a surprise given that the TARGOBANK Corporation ended. But the good news behind the decline from EUR 812 million to EUR 791 million is that EUR 61 million decline is related to TARGO. What does it mean? The rest of the business is growing with roughly 5%, which is a good number. Even stronger growing is group net income provided by the efficiency measures, which were set up in the last years, where we are benefiting from. And we are also benefiting from higher results out of the life entities due to a higher interest rate environment where we benefited from. Return on equity stands at 15.2% -- above 15%. For the year-end, we expect a slightly lower return on equity from Jens Warkentin and his team, but it will be clearly above the return on equity target level of above 10%, so which is quite an achievement in the competitive German market.

Coming to the biggest segment, Reinsurance or our participation in Hannover Re, they contributed 47% to the overall group net income. And most of you might have listened already to the conference call from Clemens, Christian, Sven and Claude. So I will not explain what they have explained. But overall, I just want to mention, they are providing us with a return on equity above 20%, and we are proud majority shareholders of Hannover Re.

Let me now dig into some balance sheet items. To start with, what we always release in the first quarter is the resiliency. What are we doing here? With regard to our resiliency, it's measurement. Part of our governance at Talanx is that once in a year, an external actuary assesses all the claims reserves or to be more precise, roughly 94% of the claims reserves are assessed by Towers Watson. They provide us with a number, how much money is needed in order to fulfill all the claims which are to be paid. And the number they provided us with is roughly EUR 5.9 billion lower than the number we have booked in our accounts. So the resiliency is at a record level. Talanx has the strongest balance sheet ever.

And if we look more into the details there, then you can see and it's displayed here in the chart that both primary and reinsurers had added significantly to their resiliency that the overall resiliency level is higher at primary than in reinsurance, but this also doesn't come as a surprise as our Hannover Re has bigger and more diversified portfolios. So it really makes sense, and they have a super comfort level at Hannover Re as well as in the primary group. So overall, we are pretty strong here, and we can cope with uncertainty very well, and this will provide us also with stability for delivering earnings growth and dividend growth.

The strong development in the first quarter is also seen in the development of our solvency numbers. As of end of year, we had 243%. Now after the first quarter, there's another increase to 249%, which is simply driven by the profits, which are seen in the IFRS accounts. So we have more own funds. Capital generation is working very well. And also these numbers are pretty good.

Looking at the net asset value development, there is a net asset value creation in the first quarter of roughly EUR 840 million, so that we now have an equity of roughly EUR 14 billion. If we add to the net asset value also the CSM adjusted for taxes and minority and the risk adjusted for taxes and minority, then this adds up to EUR 22.5 billion as an extended net asset value, if you want me to tell it like this. And this is definitely a strong number with regard to the strength of our company. And you obviously, for valuation purposes, it's recommended that you add some franchise value because we do not want to stop business. We want to continue to underwrite profitable business.

Looking at the asset side of the balance sheet, there is our investment portfolio, which is pretty much unchanged. 83% of our assets are invested in fixed income, whereof 93% in investment grade. So pretty prudent investment approach and the rationale behind it. You're well aware of it. We want to take risk insurance risk because we can diversify this risk much better than the investment risk. Our insurance risk is geographically spread throughout the world. So it's very, very, very well diversified, whereas investment risk, given the correlations of the capital markets in the world is much more difficult to diversify, in particular, in tail risk situation.

But out of the investment income, we benefit from our activities in the portfolio management in the previous year, where we have realized losses on the bond portfolio out of the selling fixed income with low coupons and buying fixed income with higher coupons. And this is well reflected in the numbers here. The investment income is up 11%. Return on investment is up to 3.8% and the finance and investment result, where also the unwind of the discounting of the claims reserve is reflected and is even up 17%. I think this is the most important number, this plus 17%. And this is clearly backing our earnings guidance for the full year.

Coming to the outlook. We are very confident. We are very happy how we have started in the first year. With regard to the mid-single-digit growth, currency adjusted, that will be a little bit more challenging, but we are confident that we can achieve it. Group net income, we are super confident that we can reach a group net income around EUR 2.7 billion. And if you then -- this translates then into a return on equity of 19%. And achieving EUR 2.7 billion means that we will fulfill our strategic 3-year plan 1 year earlier, and we will outperform it significantly. The initial target was EUR 2.5 billion by 2020 (sic) [ 2027 ]. And what you can see here, I have done the math really in detail that would represent an earnings growth of 9%. You should be aware that the management has the ambition to deliver double-digit net income growth as well as we will deliver a more double-digit dividend growth. We will provide you with a dividend of clearly above EUR 4 for the full year 2026.

And with that, Bernd, I think I hand over back to you for managing our Q&A session, please.

Yes. Happy to do so. So let's delve into the details. Q&A is open. [Operator Instructions] And we start with Michael Huttner from Berenberg.

Fantastic. It's a really easy question because you gave us a hint. It was completely unexpected. You say dividend clearly above 4%. Consensus Bloomberg is 3.7%. Can you give us a little bit more feel for this? That'd be so good. And then the other question is on volume growth. So 3%, I think, is the kind of like-for-like figure. You're saying 5 -- I'm not sure if it's like 5% mid-single digit for the year is like-for-like or on a reported basis. But clearly, you're seeing kind of positives, which we don't see, and I just wonder where they are.

So the first one is pretty simple. For the second one, I need to better understand your question. The first one with the EUR 4, we have already announced that we want to grow the dividend above EUR 4 for 2026, which is then paid out in 2027. And obviously, if you see the capital generation in the solvency number, we have the capability, even though financing Mexico out of own funds to provide you with a dividend above EUR 4. We will come with more details.

You didn't say above EUR 4. You said clearly above EUR 4.

Yes, we will. We will fulfill our promise, Michael. So this is for sure.

Is it clearly -- do you remember you had on resiliency, it was clearly above EUR 5 billion. Is it clearly in this sense, similar because you actually achieved close to EUR 6 billion, right?

No. But we will make our dividend decisions, Michael, after we've seen the full year results. So it's not the time to discuss it right now. We will stick to our dividend policy. This is a promise always up, and we will also stick to the guidance and it will be above EUR 4. But if you look at the development in the first quarter, which was definitely not too bad, then obviously, if this continues, we will have our considerations.

On the volume, just to make it clear, I'm sorry, I'm a little bit excited this morning due to your good results. The -- so -- can you say -- because you said many times mid-single digit, you maintain your target growth of mid-single-digit percentage for the year. And you say it's challenging, but you're kind of confident. Can you give us a feel for what the moving parts could be, which get you there?

So we are very positive on the development at Retail International. They have already shown us 8% growth in the first quarter and will continue to grow. We are also positive, but this is given the size of the portfolio, just a smaller part of the development in Germany that it will be less decline than initially -- slightly less decline than initially expected.

With regards to both Corporate & Specialty and Reinsurance, we have seen pretty good renewals in April. But obviously, the first quarter really matters in both of it. So given that you know how the seasonal split of new business is, the first quarter is the most important one. So this impact will also impact the other quarters a little bit. But the second quarter renewal was pretty good, and now we are waiting for June and July.

All right. So then let's continue. Next in line is Chris Hartwell from Autonomous.

So a couple of questions. First of all, just trying to think about the resilience reserve. I think you've previously said that, that was broadly full. I mean I think given how big it is now in the primary side, I assume that's very much more than full. So I wonder if you could just give a little bit of color on where that sits and I guess, the philosophy now about how that will be utilized. I mean if I look at the growth of the buffer relative to, say, the primary results, I mean, it does suggest that the underlying earnings last year were much, much higher than what you've actually reported. So I wonder if you could just give a little bit more color there.

And second, just on the Corporate & Specialty Division. I mean, revenues a little bit, I guess, subdued through Q1. So can you help me sort of think about where you see opportunity to accelerate the growth in C&S? Or do you think now this is about defending revenues and margins given the cycle conditions?

Yes. Well, thank you, Chris. First, with regard to the resiliency reserves, we are definitely in many parts of the primary group at the upper end. If you look into the more details where you asked where they're sitting, there's a lot of resiliency, in particular, in the long-tail business of Corporate & Specialty in the primary group. So looking at the future, obviously, inflation assumptions will play a major role when assessing what needs to be done and capital efficiencies also on our cards we are looking at. But what you really can see out of this resiliency is the following. Looking at last year results where we achieved a result of roughly EUR 2.5 billion, we were able to achieve this. And on top, we were able to build the resiliency. And this is really the indication that our cost leadership really pays off. So we haven't seen even better earnings growth than most of our peers. And on top of that, we were able to build this resiliency due to our cost leadership.

And so this gives us also a feeling for your second question with regard to the revenue development in Corporate & Specialty. Looking at Corporate & Specialty, we are in a position that we are by far cost leader in this segment compared to our peers. So when for others, they have to start to become much more selective on business because of their writing losses, we still can make profits. And so we have more optionality in our business model, and this provides me with comfort even though I have to admit that the market is softening here. And that there are also some parts of the business where we have to be selective despite the fact that we have this fantastic cost position. I hope that gives you some color on those questions. Yes.

Okay. So then Hadley is next in line. Hadley Cohen from Morgan Stanley.

A couple of follow-ons from Chris' questions, please, and then a couple of extra ones. So firstly, the follow-ons. Your cost advantage is clearly impressive and as you say, supports your earnings trajectory from here. I'm just wondering how you're thinking about AI in that context and the extent to which AI could narrow that relative cost advantage going forward. And then linked to the Corporate & Specialty business, I'm just wondering if you're now sort of maxed out in a lot of your resiliency buffers and what have you. How -- presumably, that suggests more can flow through to the bottom line. So I'm just wondering to what extent does that get reflected in an improved combined ratio from here? Or are there other ways that you can manage the combined ratio to offset that?

And then the other couple of very quick questions. I think, Jan, in your opening remarks, you talked about, obviously, the Mexico deal is a step in the right direction. But I think you implied that there's maybe more to come. I mean, as I understand, I think this deal has been in the pipeline for a long time now. You've shown that the market in Mexico is clearly very fragmented. So I'm just wondering to what extent you see that there is an opportunity for further consolidation in the Mexican market and how likely that is?

And then final very quick question, sorry, there's a few. Just looking through some of the detail, it looks like your ordinary investment income in primary was lower year-on-year, which I guess is a little bit surprising given the extent to which you realize losses on the fixed income portfolio and what have you. So if you could just let us know what's going on there and how we should think about the outlook from there?

Well, thank you for your question. First of all, the strategic question on AI. It's definitely the case that we believe that AI will change the composition of the cost structure in a company. We have -- we can already see that we see a lot of benefits, but the missing variable in the formula is very often how do you expect that the costs for the usage of AI will [ develop ] and how to have -- you have to design your value chain from elements of humans of the people who are working from us, deterministic software and generative AI because there you need different layers.

Using AI implies at currently, it's quite efficient given that the tokens for the usage of AI are still relatively cheap, but this may change, given all the investments the hyperscalers and the AI companies have done, they need to earn it back. And this is something where we are closely looking because we want to continue to be cost leader. We are investing in AI, but we try to invest in a way that we have agnostic AI that we can choose in between AI models that really matters to us. So we want to continue to be cost leader also with AI. But it's -- to a certain extent, it's research and development now.

Second, how do we manage our combined ratio? I would like to put that in a broader context. We try to manage the net income. We try to manage that dividends are always up. This is the first priority. And the second priority, earnings growth with lower volatility. And in the light of that, where the resiliency buffers are at the upper end, obviously, it will fall through in the combined ratio. But then we still have some options realizing some losses on the bond portfolio and some other things in order to steer results. So we are not limited to steering combined ratio when we want to steer in the end the net income development.

Third question was on Mexico further consolidation. So we have waited for a long time to capture the first consolidation option, which was there in the Mexican market. And first of all, we have now to do the work to combine the entity, to exploit the growth potential for the future. But then obviously, we do -- and by organic achievements, we believe we will achieve a #5 position in this market. But then obviously, we are open to further -- to build and -- a buy-and-build strategy to do further consolidation in the Mexican market if opportunities arise.

And the third one was on the ordinary investment income, where you found out and this is pretty right that there was just a little or flat development in the ordinary investment income and how does it fit to the realization in the fixed income portfolios last year. And the reason behind is that the outflows or the dividends out of private equity funds are also in the ordinary income. And we had a -- last year in 2025, we have an unusual high dividend flow out of this private equity investments. And this quarter, it's rather slightly below the average, what we've seen, and this is the difference.

So overall, looking just at fixed income, we have a nice increase. I guess I have to -- and you may double check this, it was more than EUR 30 million more than previous year just in fixed income. If you look at fixed income as a stand-alone. Hadley, does that answer your question?

Very clear.

Okay. So then we have questions from Kamran. Kamran from JPMorgan.

Two questions for me. The first one is just coming back to the resilience. I think on Monday, Hannover Re kind of flagged, suggested they had added in Q1 to the resilience, so something like EUR 250 million to EUR 300 million. Can you just talk maybe about what you did in Q1 within the primary business? If you can give any comments there?

The second question is just on the corporate segment. I understand the internal reinsurance was -- came in quite a lot better than last year. Can you maybe talk about how we should expect this to develop over the year, whether kind of Q1 just reflected like a really light Q1 or there's some other way to think about this?

Well, thank you. First of all, with regard to Q1, we do not have an actuarial assessment for the end of Q1. What we do have, obviously, we are talking to our actuaries, and we have something which I would call a feeling about what was done. I do not have a precise number on Q1. And as you've heard from Hannover Re, they have added to the resiliency during the course of Q1. We have also added a little bit to the resiliency in the primary group, in particular, in Retail Germany. We have added a little bit. We have added a little bit in Corporate & Specialty and not in the long-tail segments, but in others. And for Retail International, it's in line with the growth of the business, yes, because the business is nicely growing at Retail International.

The second question was targeted at Group Re. And yes, you're right, we had a much better result in Group Re due to the low large loss development. And overall, you raised the question, how do we look at it in group operations, there is, on the one hand, Group Re, the internal captive for buying our reinsurance protection and also to reinsure some of our subsidiaries. Second, there is Ampega, our asset manager in it. And thirdly, we have in group operations, the group financing costs, which you have to keep in mind.

And the good news is that both Group Re and Ampega are developing nicely. In Group Re, we have seen a buildup for the last 5 years. Now we also have some nice resiliency on Group Re level. And if then a quarter happens with such a low large loss burden in the group, then obviously, the results are better, and this is displayed here in the first quarter numbers.

Then we have questions from Roland Pfäender from ODDO BHF.

First question is regarding inflation protection. Could you provide us an update on the inflation linkers and other measures you have in the company? Secondly, on Germany, I think you are a little bit more optimistic on the business. So could you provide us an update how far you are with the repositioning? Maybe also an update on motor pricing and volume development here and maybe future plans on life distribution, if something should change there or you are targeting?

Okay. So first of all, for inflation linker, how much we do have, I need to ask my colleagues here, to be honest. So we have some billions in inflation linker to protect us, which is usual part of our risk management. Second, let me, therefore, take the second question first. With Germany, the repositioning, the first thing which needed to be done was an efficiency improvement. And looking at the cost ratios at Retail Germany, you will find out that they have improved and they continue to improve that. It's tough work, but they are proceeding with it. Second, with regard to motor pricing, so we were able to adapt the prices to the claims inflation. So we have increased our pricing compared to the previous year. Overall, the volume development was flat.

And with regard to life distribution, yes, we are a little bit more focused in life distribution, and we are trying to build new partnerships, but there's nothing yet to be announced here. It's hard and tough work what Jens Warkentin and his colleagues are doing there. And now with regard to the inflation linker, it's roughly EUR 5 billion of the investment portfolio is in inflation linker.

Okay. Then Michael seems to have follow-on questions. Michael, go ahead.

On solvency and on private credit, so solvency 243% up to 249%. I think you said it's mainly due to earnings. I can't remember, you deduct the dividend accrual or not? And does the figure then equal the EUR 774 million? Or is there a kind of extra coming through? And also, I can't remember your target, but I think you have about 220%. So 29% of EUR 12 billion, there's quite a lot of excess there. I just wondered where is it sitting? Is it sitting where you see it? Or is it sitting in your parent? And then the other question is on private credit, and that's probably incredibly short. I just wanted to know how much you've done.

Okay. Then let's kick off with private credit because this was the obvious question which we could prepare in advance. So we invested roughly EUR 1.6 billion in private credit funds, mainly in German Mittelstand private credits and there in super senior. And up so far has performed pretty well. So we do not see any need to change it. So we want to continue with this investment. We are happy with it.

Second, with regard to solvency, it's a proportional reflection on dividends embedded in the internal model. And third, the target for solvency, well, I want to be pretty clear here, the official target is 150% to 200% solvency ratio, where we are clearly above. But on top of it, we are looking to our solvency ratio compared to our peers. And you should always keep in mind that we are in the wholesale business with 70% of our business. So we feel comfortable with the solvency ratio, which is super strong. And we also have a little bit within our thinking is that the uncertainty in the world we are living is compared to the past is on a higher level.

So overall, both the solvency ratio and the buffers, which we have in our balance sheet are above the usual average level, and we feel comfortable with it. But the good news is linking back to your question with dividends, we feel now also it's coming to an upper end, and we take up some considerations there.

Okay. So just checking the screen, whether there are further questions. That does not seem to be the case, final chance for final questions. Michael, do you have any more, Michael?

Always. Always. A really simple one. You talked about Mexico and deals. But the other business which is now you're nearing your targets and above 10% ROE, et cetera, is Retail Germany. Would you ever consider a deal in Retail Germany to kind of get scale or something?

Yes. Michael, definitely, we would consider it if we can find an opportunity to grow the German business to scale it a little bit better, because scale in retail business really matters. So in particular, in P&C. And so yes, we would, but there's nothing adequate available in the German market.

You don't want to buy the big company in Munich.

It will take some time, yes.

All right. So that concludes our Q&A session, and I hand back to Jan with some final remarks, Jan.

So first of all, I want to thank you for attending our call and also thank you for your questions. And some of the questions, if I've listened carefully, embedded some hints what you would like to see for the future. Thank you for that.

I hope you received the message that Talanx is super confident to deliver on both net income growth according to our guidance and also to dividend growth. And this is backed by a strong technical performance, rising investment income and a benign large loss development in the first quarter, which provides us with an additional buffer to fulfill our targets.

Thank you for attending our call.

Good morning. This is Hannover calling with the Talanx results call for the full year and the fourth quarter 2025. I'm here together with my CEO, Torsten Leue, and my CFO, Jan, good morning to you, who will take you through our presentation and explain our numbers in more detail.

After their presentation, Torsten and Jan will be happy to answer all the questions you might have in relation to our numbers. We are on video today. So if you want to pose a question, please use the Hand Raise feature, and I make sure that you will be slotted into our Q&A. And as usual, all our complementary documents, including, but not limited to, our financial data supplement, are posted on our website in the IR section.

And with that, I hand over to Torsten. Torsten, the floor is yours.

Good morning from my side as well. So I run through the highlights from my side, and then Jan, as usual, tell you the financials more in detail. So another record year was '25 for us. You see what we have already said, a 25% growth to roughly EUR 2.5 billion. We will increase even more with 33%, our dividends to EUR 3.60. And if you see, I always say what the most important thing is what you don't see, and this is basically our high-quality earnings. Probably, we have the strongest balance sheet ever.

We just realized about EUR 860 million bonds in order to strengthen our balance sheet. And as well, and we will come later to this, we significantly increased our resiliency as well on the reserving side. So this is the strongest balance sheet ever. So this was driven by our profit engine's speed on the reinsurance side with 13% growth as well on the prime insurance side with 20% growth. And the growth comes from a kind of diversified portfolio.

We see that -- in the region, you can see we have 46% in Europe, and then, rest split over the world quite nicely diversified portfolio and as well from our segments quite nicely diversified. It's now 50-50. We usually said 60-40, 40-60. This is basically where we want to be, to be well diversified in our segments. I guess, the 50-50 is the kind of sweet spot we have now achieved. And you see as well and primarily as well, we have this Corporate & Specialty and this Retail International more or less the same size. And you see as well that Retail Germany is the smallest segment we have.

Coming to the segments. You can see that the Corporate & Specialty, we have, as we say, global player, we call HDI Global, 10% growth and EUR 551 million net income. We see Retail International as a growth player. They have increase of 36% to EUR 611 million as well bottom line and Retail Germany. In spite of, and Jan will tell later about, losing the TARGO cooperation because of expiring. Now, we have still increased 6% our bottom line in this segment.

And all this reflects to a share price, while it was end of February EUR 27.6 billion, now it's roughly EUR 1 billion higher as a market cap, which gives for the prime insurance price/earning roughly around 8. The basis of everything is we believe our Talanx business model, and you can see here the 4 ingredients. You can see, as I said before, diversification is key. We have this 50-50 kind of sweet spot achieved. We have a clear P&C focus with 80% of our portfolio with a combined ratio below 90%. It means focus always pays off.

And then, we have a business model where 93% of our portfolio has a cost leadership. We defend it and a very nice as well last year kind of cost leadership we have in our markets.

And then, and Jan again will tell later more about this resiliency, I talked to you about this realizing bonds. Now, we have as well on the resilience side significantly done more. I would say there's a sign above EUR 5 billion. I would say it's above, above -- significantly above EUR 5 billion. We will come up with detailed numbers. We come anyway as always every year on May, but the significant is the most important message here.

Promise is a promise. I mean, this is the numbers we gave to the market, we gave to you. And basically, we achieved them. So nothing more here to comment with a return on equity of close to 20%, I think, was quite reasonable year. And again, it's important what you don't see, and again, this is what we said before of increasing our resilience in our company.

We are very confident that the outlook '26, what we give here, middle single digit, around EUR 2.7 billion, return on equity around 90%, we will achieve after seeing the first months how they went because large allotted budget we have, roughly close to EUR 700 million, was not used much at all, just a little bit. So, therefore, we are quite confident how the year started.

And with that, I hand over to Jan, who will give you much more details.

Yes. Good morning also from me, and thank you for attending our call here. Let me start first with the highlights from a CFO perspective before I dig into some more details on the capital and investment side. And later on, I explain you something -- give you some color on our profit engines, the segments who have produced this really very good result.

To start with the CFO highlights, we had super strong earnings growth, 25% to EUR 2.480 billion, and we have a record high profitability with a return on equity close to 20%. And this has allowed us to increase the dividend by 33% to EUR 3.60, and this is despite the fact that we had to finance the buyout of the minorities in Poland with a triple-digit million amount in this February, which is already done.

Assessing the performance of the year 2025. Three things come into my mind. First, it was a very good performance. Second, we have been lucky. So we should remain humble due to the large loss development. And third, we have used both the performance and the luck to further strengthen our balance sheet. We are living in times of high uncertainty, and in these times of high uncertainty, resiliency matters, and now, the CFOs in the group together can contribute to providing for the strongest balance sheet in Talanx's history.

But let me start, we have been lucky. In the last year, we had the lowest large loss burden -- budget usage for the last 10 years. So on average, we have roughly 7% of the net earned premiums as a large loss consumption. Last year, we just had 5.4%. So that means we had a windfall of EUR 630 million with regard to the large loss usage.

We don't believe that this will last. This will come back to normal. And this is why we have included in our guidance for 2026, the EUR 2.7 billion. Torsten just has mentioned, we have included in that one, again, 7% of the net earned premiums, meaning that we have increased the large loss budget to EUR 3.1 billion. Why do we believe that it will come back to normal? Also, the last year shows some indication that the risks from global warming remain.

In Europe, okay, we have just had a storm Joshua with 120 kilometers per hour wind speed. But if you go to the Caribbean scene, there has been Melissa. Melissa was a Category 5 hurricane, tropical cyclone with a wind speed of roughly 300 kilometers an hour. And it has cost us EUR 340 million net given our high market share in Jamaica. And yet now, just assume what would have happened if this hurricane would have had a landfall in, let's say, Miami or somewhere else in Florida. Then, we would be talking about a market damage of -- in the triple-digit billion area, where we would also have to pay our share, which is much lower in Florida than it is in Jamaica.

So given that, we continue to believe that, that was not a trend that we have a lower large loss burden, that there was a little bit luck. And I will explain you in more detail that we have used it and even overcompensated for the luck in strengthening our balance sheet.

Looking at the second thing, the performance of our segments. And what you can see here is the technical performance of all the segments, and we have strong underwriting performance across the board. Obviously, Corporate & Specialty and Reinsurance, our 2 global business models, have benefited most from the large loss development. In Corporate & Specialty, we've seen an outstanding good combined ratio of around 90% and Reinsurance really hit with this 84%, the league table within the Talanx Group. But also both retail segments, Retail International and Retail Germany, provided for a very strong 92% combined ratios.

So overall -- and also, if we look at the attritional loss ratios in the segments, we have very well technical underwriting in place and very good portfolios. And this provides us with a lot of comfort with regard to the outlook. We have used this good performance and the luck, which we had with regard to the large losses to further strengthen our balance sheet.

And as Torsten has already mentioned, with regard to fixed income, we have sold bonds, which we purchased in the low interest rate environment with low coupons and bought new bonds of the same quality. There was no shift in the quality with higher coupons, which will shift the P&L recognition to the future. So we have taken EUR 857 million losses in the P&C area. We have excluded the losses we have taken in the VFA portfolios here in order to provide us with higher returns.

And if you want to have a rule of thumb, this means roughly this EUR 857 million, roughly EUR 170 million more EBIT for the next 5 years every year, which will contribute to strengthen our earnings quality going forward. And also, we have increased the resiliency on the liability side. So we have strengthened the balance sheet on both sides.

With regard to the resiliency, we always get an indication, as Torsten already has mentioned, by Towers Watson, an external actuary, and this assessment is not finished yet. So I do not have the numbers right now, but we are very confident that we will be significantly above EUR 5 billion when we publish the numbers in May. And second, we are also very, very, very confident that within the split in between Retail and Reinsurance that in Retail, we will provide for higher resiliency numbers as in Reinsurance, where we have a bigger and more balanced portfolio. So for both, Reinsurance and Primary Insurance, we are at the upper end of the resiliency that we believe is efficient to cope with the volatility of the very uncertain world we are living at.

So let me provide you now with some insights on capital and investment management. I would like to start with capital management. So what have we from an NAV perspective delivered to our shareholders? This is what you see on the left side of the chart. So in total, if we add the increase of equity and the dividends we paid out to our shareholders, we have had a net asset value creation of EUR 2.5 billion. And on the right side, you can see if we extend the equity with other shareholders component, expected future profits, which are already displayed in our balance sheet, this is -- we are adding the CSM and the risk adjustment minus taxes and minority shares, then we are roughly at EUR 21.3 billion overall net asset value. This view obviously does not reflect that we want to continue our business and to write further -- to continue to write profitable business. And so it's just one part of the valuation.

Now, second, where do we generate the cash from in order to pay our dividends? So the starting point, obviously, is the net income where we have the 50-50 split in between Primary and Reinsurance. With regard to the cash contribution, the cash contribution from the primary group is a little bit stronger. They're providing for 65% of the cash, which is perceived by in the Talanx AG, and 35% is derived from Reinsurance. And both together allows us to increase the dividend by 33% to EUR 3.60 for the current year.

Looking at the solvency number, there we also see -- there you also see a nice development, which is simply backed by our good business development, by the increase in equity. We have an increase in own funds and rather stable solvency capital requirements, and this leads to a number slightly above 240%. The audit of the solvency number is not yet finished. We will publish this also in May together with the resiliency numbers.

Coming now to some other finance information with regard to the debt leverage, we have reduced the debt leverage. This is obviously also a consequence of higher equity to 29.7% for the Talanx Group, where we have an internal threshold of 35%. And for the HDI Group, which also includes the mutual on top of the Talanx, where we even have a leverage ratio of 22.8%, which is well below the 30%, which we have set out as a threshold for the HDI Group. So the maturity profile of our debt financing is very well balanced. And you're all aware, we will have to refinance EUR 1.25 billion, which is due in June. So we will have a refinance in the next 4 months. And as you can see, we have a very balanced maturity profile here.

Coming from capital management to investment management to our investment portfolio, it's a little bit boring because it's the same message like we have had in the last calls. So we have a very conservative investment approach with more than 80% of our assets invested in fixed income, and out of that, 93% in investment grade. So we have just 17% of our portfolio allocated to yield enhancement products, which are displayed in the pie chart on the right side of this chart.

The main activity last year was realizing of the losses in the investment portfolio, but we bought the same quality of bonds again. So there was no shift towards risk on or risk off by doing that, and this will provide us a further increase in return on investment, which is displayed on the right side. Assuming we wouldn't have done this EUR 857 million realized losses, the return on investment would have been 3.4% for 2025.

Let me now dig into our profit engines. Our segments will provide us with this very good result. To start with Corporate & Specialty. Edgar Puls and his team, they were really able to provide us another year with a very, very strong result. With regard to growth, they were able to grow the business by 2% in euro terms, currency adjusted even 5%. Group net income contribution was up 10% to EUR 551 million, a very strong number, having in mind that they have strengthened both on the asset side and on the resiliency side their balance sheet again. And this was feasible because of an outstanding low attritional loss ratios with 90.3% combined ratio, which is -- which does reflect it. Return on equity stands at very, very good 17.3%.

What drives my confidence with regard to the future? We have a very well-diversified portfolio here, and it's very well diversified by both by regions and also by lines of business. And Edgar and his team was able to achieve rate changes by lines of business slightly above inflation rate during the course of 2025. And this is despite the fact, as all of you know, that we have a softening market here, so they performed really good.

And this brings me to the outlook of Corporate & Specialty. We are very confident that they can achieve growth again, that the combined ratio should remain below 92% and that the return on equity will stick above 16% for the year 2026.

Coming to the next segment, Retail International, they are our growth engine. Insurance revenue were up 4% in euro terms. They were heavily affected by currency effect because currency adjusted, they achieved 10% growth. The group net income was even up 36%, and 36%, okay, there was one special effect in it. We bought out the minorities in Poland, and they contributed these minorities, and we could account for it already in 2025. And this minority they added EUR 68 million net income in total to the EUR 611 million.

So without the EUR 68 million minority buyout effect, the growth rate would have been just 21%, which is still a super number. Return on equity stands at 19.1%. Excluding this one-off effect, it would have been 16.3%, which is a super strong number for Retail business. What provides me with comfort with regard to the future development, like in Corporate & Specialty, we have very well-diversified portfolios with regard to the regions we are in and also with regard to the lines of business. And this good diversification is backed by strong technical excellence in both in South America as well as in Europe. With combined ratios in the area of 92%, these are really very strong portfolios, and they provide us with quite some comfort that we will expect future growth in net income.

So what do we expect from Retail International for 2026? So we expect to have a mid- to single-digit growth in original currency. We expect the combined ratio to remain below 93% and a return on equity above 16%, which is a strong ambition for Wilm Langenbach and his team.

Coming to our smallest segment, Retail Germany. In Retail Germany, as Torsten has already mentioned, we had a decline in insurance revenue due to the end of the TARGO cooperation. We expect that this end of the TARGO cooperation, we will see 2/3 of the effect in the 2025 numbers and 1/3 in the 2026 numbers. And despite this decline in top line due to the restructuring efforts of the management team around Jens Warkentin, they were able to grow the net income by 6% to EUR 173 million. And the return on equity stands at around 12%, which is a decent number.

With regard to the segment, this is pretty small, with regard to insurance revenues, just 7% of the group, and also, for the group net income, it's just 7%, but it's very strong in terms of cash contribution. We have received 15% of the cash contribution of Talanx AG from Retail Germany. So it's an amount above EUR 200 million, and we expect this to continue further. This will be our cash cow also going forward.

With regard to the outlook 2026, we expect a further decline, single digit, not so big as in 2025 due to the end of the TARGO cooperation. The P&C combined ratio should remain below 93%, and the return on equity should be double digit again. Coming from the smallest segment to the biggest one, but most of you might have heard the call of Clemens and Christian with regard to their numbers, Hannover Re is growing 2%. And if you adjust this 2% for currency effect and also for some reassessment in the accounting, it would have been even close to 10%. And if you compare that to the peers, you clearly can see that Hannover Re is benefiting from the lean operating model with a cost advantage and can translate it into growth.

The group net income at Hannover Re is up by 13% to EUR 1.3 billion. This is just a 50% share for Talanx, which is displayed here. And this is backed by an outstanding combined ratio of 84%, which was heavily also impacted by the large loss development. Return on equity stand at record level, 21.7%, clearly a strong number, and we are proud majority shareholders of Hannover Re.

With regard to the outlook, we expect further growth to happen here. Despite a softening market, combined ratio should get back to normal, below 87%, with a normalized large loss development. From Life and Health Reinsurance, we expect insurance service result of EUR 925 million. And this should then lead for net income contribution for the 50% share of Hannover Re to Talanx of EUR 1.35 billion or at least EUR 1.35 billion, which translates to in 100% numbers for Hannover Re more than EUR 2.7 billion profit.

Having said that, I think it's up to you, Torsten, to provide us with the outlook for the group as a whole.

Very good. This is our business model, and it runs through all cycles, and we believe the strong ingredients, which basically reflects then the performance you see. What we say for 2026, we say net income above, let's say, plus 9%, around EUR 2.7 billion, so an increase of 9%. And we say as well a dividend, which we will then propose to general meeting next year of above EUR 4, which means above 10% double-digit growth of dividends. And that would mean if this comes in that we are, what we promised in '27, 2027, that is 1 year earlier and higher as delivery to you. And the outlook, therefore, which was said already, these are the 3 numbers you can see.

And with that, I would hand over to Bernd.

Okay. Thanks, Torsten and Jan. So we are now opening the queue for questions. If you have a question, please use the Hand Raise feature, and I will call you into the Q&A. And the first question is from Chris, Chris Hartwell from Autonomous. You are mute. You are muted. Chris, you are muted.

How is that? Can you hear me now?

That's perfect.

Perfect. Sorry about that. You would have thought 6 years after COVID, we'd get the hang of Teams chat, but I'm still learning. So a couple of questions from me, if I may. Firstly, just on the comments on resilience. So I guess, there's sort of a part A and a part B on this question. The sort of part A on that is how I should think about the combined ratio for Corporate & Specialty in 2026 and beyond. I mean it's -- the target is broadly maintained at better than 92%. Do we see that as -- I mean, is that now closer to reality in terms of what you are reporting? And then sort of part B to the question around resilience is if you sort of take away the lever of earnings management through the reserving side of the balance sheet, what does that -- where does that sort of leave you going forward? What are the -- I mean, is the only really -- any real lever available to you now on the fixed income portfolio? So that's question number one.

Question number two, if I may, is really about the situation in the Middle East. I wonder if you could just sort of share your thoughts or concerns if you have them around particularly in the Corporate & Specialty side, maybe even the Reinsurance side. And maybe also touch upon whether there's any concerns you may have in Turkey.

And then a cheeky third, if I can sort of push the boundaries a little bit, is just on the solvency ratio. I appreciate it's unaudited or unfinished at the moment, but 240% is a big uptick quarter-on-quarter. So I was wondering if you could just help me understand what the moving parts are to that at the moment.

Chris, so I start with the middle question with the Middle East, so basically -- and then Jan will give you the next -- the other questions you had. So what we feel basically, it's much too early to say really because so far what we can see is that we have a large loss burden for the first quarter and which is not used much, so everything fits in. We had no material damage at all in the time now. And we have anyway not much insured or nothing in Iran. So basically, for us, it means the question is -- and the big question is how long the war will take and how large it will become, right? And therefore, everything is open. But so far, it's much too early to say.

And all the rest, you can estimate yourself secondary effects like interest rates increasing and so on. But here, our answer would be always our business model through all cycles, when it comes to volatility, we try to have a lot of substance and strengthen in our balance sheet. We have a market risk, which could be a secondary effect. We have a slow, better approach, where basically, as Jan mentioned before, quite boring asset management portfolio, but a high-quality one. So this is really the answer, it's much too early to say. So far, we see nothing big in our portfolio, and we have a lot of space in the first quarter. There was no really nat cat events, expect the U.S. winter storm, but that's all we had.

And then, I would, the first and the third question, leave to Jan.

So the first question was on the resiliency policy splitted between how we should -- you think about the combined ratio, and with regard to the investment income, what is expected going forward? So rather simple, yes, with regard to the combined ratio, sort of, what we have set out as a guidance is how you should think about going forward, the combined ratio with a normalized large loss development. Yes. So -- and second, with regard to the investment income and the contribution of both sources of income, investment and insurance service result, yes, we will have a higher share of the investment income. Due to the realization of the losses in the bond portfolio, they will contribute, obviously, to higher investment income, which is included in our guidance.

And the third question, with regard to the moving parts of the solvency development, on a top level, it's rather simple. We have an increased own funds, but the solvency capital requirement remains stable. Yes. And so this drives the solvency ratio up.

Why does the solvency capital requirement remain stable? We have this rather boring investment portfolio. And what we've seen at the end of the year was higher interest rates, which is a benefit for the solvency ratios in the life entities in Germany, in particular, and lower spreads and so -- at the end of the year. And these 2 effects leads to despite the fact that we are a growing company to the factor that the solvency capital requirement remained rather stable.

Okay. So if I can just come back to the second one on the resilience -- well, not really resilience, on earnings management. So just coming back to the -- I guess, the sort of question I was trying to sort of get to is if we -- I mean, let's say we go through 2026, and again, it's a relatively benign cat year. I mean, if my understanding is correct, I mean, there's going to be no real room for increased resilience within the P&L, both on the reinsurance side and on the primary side. So am I right in thinking that the only lever you will really use to absorb any excess profit this year would be through unrealized losses into realized losses? Otherwise, anything on the underwriting side just drops through to the P&L this year. Is that the correct way to think about that?

You put it a little bit to the extreme. Yes. But you're right, we are at the upper level of the resiliency, in particular, in Primary Group and in Corporate & Specialty, there you're right. But you never know whether there's some room to maneuver. I just want to draw your attention on one factor, which is quite important for reserving, which is the assumption on inflation. And one consequence of the Middle East war could be that we have higher oil prices, higher inflation, and this then leads obviously to a little bit more room to maneuver also with regard to the reserving policy. But the new -- good news, I really want to bring across, given our reserving level, which we have, we really can cope with this.

Thanks, Chris, for your questions. Next one in line is Michael Huttner, Michael from Berenberg.

Fantastic case stand. I joked with your IR, Jan, that you had, had a heart attack when you saw the dividend. I'm sure that's not the case. But I'm always asking for more. So help think us, guide us and -- because your wonderful IR did kind of say, yes, the earnings growth may be, but the dividend growth should be faster going forward. So maybe we can touch on that a little bit. I know it's looking forward and you might say it's far too early.

And then the other one -- two, I'm cheating here again. But on credit, can you give us a little bit of indications? I know it's a small number, but anything is always helpful on that topic, you always worry.

And then, on the solvency, what are you going to do with it? 240, plus you'll get a little bit of benefit from Solvency II review in January next year. So where -- what are you going to do with that? And I always think the management bathes in gold every morning, but I'm sure you do more interesting things with it. I'm thinking more deals.

Michael, nice to see you. Basically, I take the first, and Jan takes the second and third question. Well, nice try, but what we say is a 33% dividend is now. And for next year, we promise above 10%. Whatever means above, but it's above 10%, and it's EUR 4 above 1 year earlier and higher and nothing more we tell here.

Okay. And then the second question from you, Michael, is on private credit, if I understood correctly. So as you can see in our numbers, we've just allocated a small amount. We have also allocated roughly a little bit more than 1% to private credit funds here. So hence, the development in 2025 of this private credit fund was a positive one. So we earned money, which is a double-digit million number.

On deals?

Solvency and deals, 240% solvency.

Yes. So we are open for deals, but we will not release any further information on what we are going to do. So -- and as always, I just want to repeat what I'm telling you always, we have internal yardsticks on deals. Out of 20 deals we look at, one is realized. So we will have discipline. We will continue to have discipline on that one. It has to add to our portfolio in a nice matter, in nice ways. And what we've always said, we would love to do deals in Latin America, in Mexico and Colombia. We would love to do deals enhancing our Corporate & Specialty portfolios. And we are rather reluctant in both Retail Germany and Reinsurance with different reasons. For Reinsurance, that obviously would not add to Hannover Re and would be rather a risk for their culture. And with regard to Retail Germany, there's nothing available.

Maybe just to say -- just to add on this with M&A, we love M&A and totally right, as Jan said, just from 20 out of 1 is just working. When people talk about cycles, each cycle has good chances. So sometimes you have cycles where the prices are coming down in M&A, not justifying relation. So maybe you can keep time as well for M&A, as you have seen as well in the last time. So market is more active. So we see each cycle has the chances. So this could be maybe a good time. Always saying we are going to be disciplined, what our group indicators are showing, Jan takes care about it.

Okay. Thanks for your questions, Michael. And the next question we have from Iain, Iain Pearce from BNP Paribas.

It's just 1 on the large loss budget. So the increase of 11% in a large loss budget year-on-year versus the mid-single-digit revenue growth guidance. Clearly, some of that is Hannover. But could you just sort of talk a little bit about why the increase is so much bigger than the revenue growth guidance, if that reflects any change or expectation and mix over the course of 2026?

Yes. I think I should take this question, what we do in risk management? We always have a look at both, at our retail structure and on the incoming business. So it's not just related to the development of the top line. And out of that, we form our large loss budget. It's really something without any buffer. It's really coming exactly out of the underwriting and risk management tools. And so we have a slight growth in the net appetite on nat cat for the year 2025 on top of the growth of the business.

Okay. So I'm not sure, Michael, is that a follow-up question you have? Or is your hand still up from previous? And follow-up question from Mike. So go ahead, Michael.

It was just to ask on Slide 28. I love this slide on pricing. I think -- so the numbers are mostly positive except property, but they're before inflation. So I'm just wondering, can you give us a feel for how you see risk-adjusted after inflation? I know it's a complicated question.

And then, the fairly boring question as well, AI. What does it mean for you? I don't know, basically, what we've seen from some of your peers is lots of cost-cutting. Others have said it's more helping on sales, but anything would be -- any kind of feel would be very useful.

I mean, on AI this is, I take the second, and Jan takes the first question. Well, AI people say it's overhyped and underestimated, which I believe is true. How we tackle this significant focus on those areas we really can scale up and with us underwriting and claims, or more precisely in retail, it's more claims, and then, wholesale, it's more underwriting. I think the whole market is trying now to skill up their people to make some nice cases, but at the end of the question about scaling up.

And here, I mean, it's not just about efficiency. I rather would mention it's a lot of growth opportunity as well because you can handle much more offers from the brokers, you can be much faster. You can do work, which really is a simple work you don't need anymore. And let's say, it's a routine work and you can really make more quality work, I think, in the organization.

Having said that, it's very important to see it's not just about technology. This is maybe just 10%, 20% to implement. This is an easy one, yes, like an Excel sheet in your company. It's more how to use it and how to make the processes and how to change the culture, end-to-end processes. So this is much more challenging. And you always have to see that there's a business case, which you scale up. It doesn't make sense if I tell you hundreds of cases if it doesn't scale up. So really the bottom line effect, it should be really a business case.

I think our organization is -- and this is something which sounds not logical in the first step, but we have the fourth segment, and they have their clear road map, actually presented yesterday to the Supervisory Board. And it's very promising what the companies do sometimes outside of the headquarter because we have to be close to the client, close to the customer. It's not an IT project. It's a business-driven project, which really makes sense to the customer and where we can scale up. So as I said at the beginning, it's totally hyped, the whole thing, but it's totally underestimated as well. And now comes the time of scaling up in the next 1, 2 years, I guess. And we are, I think, on track.

Okay. I'll take the second one with regard to the rate changes in Corporate & Specialty. So overall, for the year 2025, we have been lucky to achieve a rate change slightly above inflation. Going more into detail, as you said, it's really complicated. Just to review a rough number together with the actuals for the group as a whole, not only in the segment, Corporate & specialty, we have assessed how many inflation indices we use for forming our expectations for underwriting. It's more than 400 now -- 400 different ones. Yes. So it's a real huge number, very often a composite of different indices.

And obviously, yes, just to look at the CPI, development is definitely not enough in insurance if you want to do your underwriting right. And this is where our underwriters work with. And yes, we have to admit that the market is softening a little bit. But given the quality of our portfolio, this is why we have set out the expectation on the combined ratio as it is. And this expectation also includes a normalization in the large loss budget usage.

Can you explain that last point, the normalization of large loss?

We have inserter -- when you have models for underwriting, then you have an attritional loss ratio and you have a large loss consumption. And we have included in the combined ratio, obviously, both, the assumption of a normalized large loss development for this year and the very outstanding good portfolio quality for the attritional losses.

So then, we have another question from Roland Pfaender, Roland from ODDO BHF.

A question on Corporate & Specialty. Could you maybe speak a little bit more about how you want to develop this business line further? So would you like to expand, for example, in North America our Specialty? And also in Specialty, is there something changing the competitive environment? We see here some market consolidation going on. So what is the future of this business set up looking into the next some years?

Yes. Thank you, Ron. Very good question. I mean, this segment of Corporate & Specialty or Specialty business itself really doubled last year. It was a good cycle, and we love this business. So, therefore, if you love this business, you have really to go to America as well. I mean, we are there, but we would like to do more here. America is 50% of the worldwide corporate specialty market. We have approach where we rather think about niches, about special things in the Specialty area and not give a large acquisition here.

And yes, the market was very active, as you have seen, and I think it will continue to be very active. And we are part of searching and seeing pipelines, and there's a clear focus where we want to grow, but it has to make sense economically. And again, if the cycle is as it is now, maybe it's a better chance than a cycle which is high, which makes economically more sense actually for us. So, yes, U.S. is a target market. We are looking, but there's nothing concrete in the pipeline, so -- which we will have to announce. But basically, we are there, absolutely. And we can allocate our capital there.

Okay. So let me check the screen whether there are more questions. Any further questions? Final call for questions. Michael, Michael is approaching the question limit. Michael, any...

Yes. One more. One more. And it's just a very simple one. So you have 93% -- so 2 questions, sorry, cost advantage in -- across your businesses. I assume that's Corporate & Specialty, Reinsurance and Retail International, but not Retail Germany. Is that -- is the gap to your competitors increasing, narrowing? I suppose the question I'm asking is how much of an edge do you have, your peers? And is that moat, if you like, getting bigger?

And then the second question is much simpler. You kind of alluded to it. You said high interest rates help the solvency of your German Life unit. I'm always curious on that. I know it no longer matters, you've got so much money, but what's the ratio there now?

So when it comes to the efficiency gain, well, we don't have the numbers yet of our peers from last year. But the feeling is that we didn't have any difference to the distance, to the market and each segment has different kind of ranges. I think we talk about, let's say, roughly from 3 to 8 percentage points difference in our cost positions wherever we are in the countries. And overall, we don't see we lost it.

Just remember, we have still 300 people, actually 291 people in the headquarter and roughly 30,000 out there. So we have a lot of cost measurement in place. But basically, this measurement are not severe. It's more about transparency because the culture of people, and this is long-lasting since the mutual at the end was founded. It's a very strong cost culture where we are really aware, not just because we're sitting in Hannover by chance and not in the more expensive towns, but basically the structure itself. So structure-wise, we have not built any add-on bureaucracy in the company, rather stable on the cost in some areas. And we don't feel at all we have lost this advantage last year. But again, the transparent we only have mid of the year.

And I think, Jan, you can help with the other, with the Life portfolio. Yes.

Yes. The solvency ratio in the Life portfolio has increased. Yes. I do not have the numbers in -- because we have very different life entities, but overall, it has increased quite substantially. And the reason is rather simple. We have a higher interest rate, which is good for the ALM. And second, we have a spread tightening, which is good for -- given that the market risk in those businesses is a huge part of the overall solvency capital requirement.

Okay. So final call for any further questions if there are any. Checking the screen. So there do not seem to be more questions. So then I hand back to Torsten for some concluding remarks. Torsten?

Well, I only want to conclude. Thank you very much for your trust and for your comments and your questions, and let's continue our dialogue coming up, and promise is a promise.

Thank you.

Thank you.

Good morning. This is Hannover calling with our little video show to present the Talanx results for the first 9 months and the third quarter of the current financial year 2025. I'm here together with my CFO, Jan Wicke, who is happy to take you through the details of all our numbers. And after the call, we are happy to answer your questions during our Q&A session. We are on video today. [Operator Instructions]. As usual, all the documents that complement our presentation today are posted on the IR section of our website, and you will find there not only our presentation but also the much more comprehensive financial data supplement.

And with that, I hand over to you, Jan. The floor is yours.

Well, thank you, Bernd, and good morning, everybody, and thank you for attending our earnings call. And I'm glad to give you some insights on the recent development of Talanx. We have very good numbers to be reported. First of all, during the first 9 months, we were able to grow our net income by 23% compared to the previous year to EUR 1.964 billion. And by that, we are even close to the full year earnings numbers from 2024. This strong earnings growth is driven by a strong profitability.

Return on equity stands above 20%. And this gives us the confidence that we have increased both the outlook for 2025. We intend to achieve a result above EUR 2.4 billion for the full year 2025. And we expect another double-digit earnings growth for 2026 and want to deliver a result around EUR 2.7 billion in 2026. What gives us the confidence that we can deliver on that one? Insurance. In insurance, it's all about good diversification. And we have a high degree of diversification in both ones, what you can see here by geographic diversification, a really well-balanced portfolio and second, also by business model.

In the first 9 months, roughly 51% of the net income was derived from primary insurance and 49% from reinsurance. So it's really very well balanced, what you can see here. Looking into more detail into the numbers, we can report that insurance revenue measured in euro were stable, whereas adjusted for currency, we see a 2.7% growth. If we further adjust this number for what the colleagues of Hannover Re have explained to you, the refinement of the calculation of reinsurance revenue, then it would be even a growth rate of 6% during the course of the first 9 months.

Profits are up 23%, and this is mainly driven by an outstanding technical performance. We were able to achieve a combined ratio of below 90% for the group as a whole. And this is, to be honest, even if you adjust for the discounting effects and so on, we did some math here with the controlling team. It was the best number after 9 months in the Talanx history.

Return on equity stands at 21.5%. Yes, we have some benefits from the currency accounting. But even if we adjust for currency impact, then it's still 19%, which is a very, very healthy number. What makes our numbers even stronger is the way how we're considering large losses. As you are well aware, we are booking either incurred or budgeted numbers. We always take the higher off. And in this 9 months figures, we have included roughly EUR 2.2 billion large loss burden, even though just incurred and reported up till now just EUR 1.523 billion.

What does that mean? We have a large, large loss buffer for the fourth quarter to come with more than EUR 660 million. Part of it will be consumed by the hurricane in Jamaica and some other events, but nevertheless, we have a huge buffer for the fourth quarter. You may now raise the question whether we are too conservative with regard to the calculation of our large loss budget. And this is why we have included this chart here in the presentation.

What you can see here is the large losses compared to budget over the last 13 years. And what you can see easily that on average, we had an overutilization of the large loss budget in the third quarter, which is a hurricane season by more than EUR 100 million. But in 2025, we had the lowest ever number in what we have seen. The good news is we can deal with such a volatility.

So all in all, the very good technical performance, the very prudent accounting gives us the confidence that we can deliver more than EUR 2.4 billion in net income for 2025 and deliver also return on equity of above 19%, which is just if you do the math.

Let me now explain you more into detail where the profit is coming from during the course of the first 9 months. So I will guide you a little bit through the segments. To start with Corporate & Specialty. In Corporate & Specialty, we have seen a healthy growth of 4% measured in euro, currency adjusted even 6%. If we go more into detail, we had a little bit more growth in Corporate, a little bit less growth in Specialty, but very healthy.

Group net income is up 13% to EUR 409 million net income. And again, the team around Edgar accounted for the 9 months figures very, very prudent. So we used all, again, certain things to strengthen the balance sheet. For instance, we took some losses in the fixed income portfolio in order to buy new bonds with higher coupons, which will then support the earnings growth in the years to come.

The return on equity stands slightly below 17%, clearly outperforming internal targets. We are very, very satisfied with this consistent outperformance in this segment. Going to Retail International. In Retail International, the growth measured in euro of the insurance revenue was 2%. Adjusted for currency, it was 8%. So the currency effect was quite large due to the devaluation of South American currencies compared to the euro.

Looking at the group net income development, we see an increase by 40% to outstanding EUR 474 million. And this was, in particular, driven by a very good technical performance, which if you go more into details, part of it was the loss development and the other part, nearly half of it was also cost development, working on the cost positions in the various countries.

Return on equity stands at 19%, 4.5% better than in the previous year, but there's one special effect needs to be mentioned.

Due to the buyout of the minorities in Poland, I explained that in the previous quarterly call, if we adjust for this one-off effect, then the return on equity would stand at 16.4%. So we already can account for the profits, but we are paying it the minorities out in the next year. So there's no equity burden on it, and this gives a double lever on those numbers. But nevertheless, 16.4% return on equity in retail, this is an excellent number provided for by Wilm Langenbach and his management team.

Going to Retail Germany. By no surprise, we have a decline in the insurance revenue by 7% due to the end of the Targobank distribution agreement. And to give you also some guidance what is to be expected for next year. In this year, we will have the majority of the decline due to the end of the Targobank cooperation. And then there will be roughly half the effect again next year. And then we should grow again in Retail Germany.

Despite the decreasing insurance revenue, the management team around Jens Warkentin was able to increase the net income by 5% to EUR 123 million. And this is driven, one, by a very good technical performance. And if you go there into detail, there was a portfolio restructuring in non-life, which worked out pretty well, but also cost management. So the total costs in the segments are down 10% compared to the full previous year. That's really an outstanding achievement what they have done during the course of this and the past year.

Return on equity is double digit, and I expect it to be above 12% for the years to come, given that this segment contributes a lot to the dividend -- in terms of dividend payments to the group. So we are lowering the equity due to the lower business volume.

Coming to reinsurance. In reinsurance, I'm sure you might have listened to the call from Clemens and Christian. They are growing profit 7%, achieving a return on equity above 20%. We are proud majority shareholders of Hannover Re, and we are really appreciating their outstanding ongoing and consistent outperformance.

Digging a little bit more in capital management. Here, I also have some good news with regard to our solvency ratio. So solvency ratio is up 9 percentage points compared to the last quarter to 233%. If we look into the details, so the solvency capital requirement on a group level is rather stable, but we have this nice profit. So we have more own funds, and this is what's increasing our solvency ratio here.

So risk capital requirements are rather stable. This has also to do with our rather boring investment portfolio where we follow a low beta approach. What you can see here still more than 80% of our investments are in fixed income and more than 93% -- 90% in investment grade. So a pretty prudent investment style what you see here. And nevertheless, we are able to grow our ordinary investment income by 7% compared to the previous year 9 months numbers.

The portfolio yield is increasing step by step, and we are accelerating this process by realizing losses on the fixed income portfolio in order to lock in higher interest rates for the future. We did so not only in the years 2022 to 2024 by more than EUR 1.2 billion. We also did it during the course of the first 9 months where we have realized more than around EUR 380 million losses, what you can see here on the chart.

And to give you some guidance for the full year, I would be very much surprised if the number is below EUR 500 million for the full year. So we are continuing to do so in order to support the earnings growth in the years to come.

Coming to the outlook. We are very, very confident. What drives our confidence is our distinct business model. First of all, we have a very good diversification. 51% of the net incomes were derived from primary insurance. We have a very good 50-50 mix and also the geographical diversification, which really matters in P&C business is very benign.

Within our company, we have a focus on P&C business. More than 80% of our premium volume is derived from it. And so if you walk the floors here, there's a lot of discussions about where risk materialize, how risks develop and so on. So it's a kind of underwriting cultures. And this enables us to deliver a combined ratio this year even below 90%.

Where we are really passionate about is our cost leadership. In 93% of our businesses, we are cost leader. And this enables us to deliver more value for money to our customer. And this will enable -- this gives us a competitive edge. All the 3 elements, diversification, P&C focus and cost leadership brings our business model to another level. But next to that, we have something which is our resiliency, which in a world of higher uncertainty is really important.

We have reported at the year or at the first quarter in this year that external actuaries have assessed our reserves and found a resiliency of EUR 4.7 billion. They will do it again end of this year, and we will report this number in the first quarter. And I would be very much surprised if the number is lower. So we are still strengthening the resiliency to cope with the higher uncertainty in the world we are living in.

So putting all together, a strong balance sheet, cost leadership, good diversification, P&C focus, this gives us really the confidence that we have a competitive edge in our cyclical markets. And this drives our overall outlook. For the year 2025, we expect to deliver more than EUR 2.4 billion. And for 2026, we set out a guidance to around EUR 2.7 billion, which is another double-digit increase compared to the previous year. And by that -- by the way, we will achieve our midterm target, which was initially set out for 2027 to achieve a result above EUR 2.57 billion one year earlier and higher. And so we are quite happy to report these numbers and this confidence. And with that, Bernd, I hand back to you to take the questions.

All right. So then let's dive into our Q&A. And the first questions come from Hadley Cohen from Morgan Stanley.

So a few questions, please. Firstly, with regards to the outlook, Jan, congratulations on raising it to the extent that you have. I'm just wondering how we think about the dividend in that context because you were previously targeting a EUR 4 dividend in 2027 based on EUR 2.5 billion of net income. And now you're targeting EUR 2.7 billion in 2026. So how should we think about the dividend trajectory in that context?

And then another question on the outlook is you're implicitly getting -- you're already at the 50-50 split between Primary and Reinsurance currently and expecting it in 2026 as well. How are you thinking about the relative growth of the 2 business lines, Primary versus Reinsurance going forward? Do you expect them to be broadly similar? Or do you think the Primary can outgrow Reinsurance over the medium term?

Second area is on C&S and the top line there. I mean I think it was a little -- it missed slightly versus what I was expecting, I think in part FX driven, but also I think you're being quite selective in some of the business that you're writing. Can you just give us a quick update on the underlying pricing dynamic there and which lines of business you're seeing is still attractive and where you're sort of reducing exposure, please?

And then finally, just a very quick one on the German Retail combined ratio, incredibly strong at 87.4%, I think, for the 9 months. I know that there was some favorable elements earlier in the year, but how should we think about the sort of normalized run rate there?

Thank you, Hadley, for your questions. Quite a few. I'll start with the dividend outlook. It's -- so first of all, the dividend policy will remain unchanged, always up, and we will decide after the year-end closing on how much upside we will provide to our shareholders. I just want to bring across the message that capital efficiency matters to us. And second, also, please keep in mind that we have to pay for buying out the Polish minorities in the first quarter of the next year. So this has to be also kept in mind when you do your calculations how much dividend will be decided on after year-end closing.

But the good news is pretty clear, given the earnings development, we have more room to maneuver. So this is for sure. Second question was with regard to the growth outlook, Primary versus Reinsurance. First thing, I have to admit something. We are not setting out top line targets to our entities. So what we are setting out is earning growth targets. And this is what we are discussing. And it's even written in our underwriting guidelines that there's one sentence, which is really famous with another company, which is volume is vanity, profit is sanity.

And the mindset is we want to grow where we see profitable growth. So the growth from Primary and Reinsurance, well, we will capture the business opportunities where they are. And so it's a little bit difficult to give you there a straight answer on that one. And given the cost leadership we have in most of our markets, we are very confident that we are able to capture them.

Third question was on Corporate and Specialty top line development. It's 4% in euro, 6% currency adjusted, a little bit more in Corporate and a little bit less in Specialty, the growth. In total, we see still a positive range change of around 3%. Where are we more cautious? We are more cautious in those lines where we believe that inflation impact is a little bit stronger. So it's always keeping in mind how much inflation. So we have to make a bet on the expected inflation when doing the pricing.

And we do see some inflation. So this is what needs to be kept in mind. In detail, it's a little bit more complex because we have to distinguish between line of businesses and geographies. So it's -- but in a nutshell, overall, I would expect us also in 2026 to grow a little bit more in the Corporate than in the Specialty segment.

The fourth question was on German Retail, the combined ratio, and it's really an outstanding combined ratio, what we've seen, and there was this one-off effect, you reminded correctly that due to the assessment from the external actuaries, they found something where we had to release some reserves and as an effect of it. If we normalize it, I would expect in the low 90s combined ratio in the next year to come, but not at this level. This is really outstanding. I hope I've answered, Hadley, your question.

Yes.

Then we go on with the next questions that come from Chris Hartwell from Autonomous.

So just a couple of questions actually, maybe 3. So firstly, just on the sort of the broad question of balance sheet prudence. I mean you mentioned that for the first 9 months, you are running way, way, way below the large loss budget. I mean you've talked about realizing losses. So that's a couple of hundred million more in Q4. I was wondering also if you could just give a little bit more color on other thoughts on where you may also find a place to strengthen the balance sheet or put into the balance sheet, if that's a better phrase.

And secondly, I just want to sort of come back to the target and obviously, the previous comments, just wondering if you can give a little bit more color on the construction of that EUR 2.7 billion. We've obviously got the Hannover Re element of that. But I was wondering if you can maybe sort of talk a little bit about your relative bottom line excitement as you see it in the various retail and other businesses.

And then thirdly, just a very quick question, just on the structure transformation into an SE. If I cast my mind back, I think, quite a few years now when other companies did similar, there were capital benefits, I believe, from that. I was wondering if you may see the same from that also.

So first, with regard to the balance sheet prudence, Chris, -- so the primary -- the first focus will be realizing some losses in the fixed income portfolio. The resiliency embedded in the liabilities is really already very strong. And also from a capital efficiency point of view, there's just a few millions to be added, but it's not huge because we are -- it will be much better than the resiliency, which we published last year.

But for the fourth quarter to come, the main focus is on fixed income, and we will also have some prudence in the tax accounting going forward. Overall, the balance sheet, I really can tell you, it's the strongest balance sheet Talanx ever has had. So we are already on a very high level.

With regard to the second question, EUR 2.7 billion target. We -- Hannover Re has published their guidance for 2026 as well. They want to deliver also EUR 2.7 billion. So -- and we have then the primary and then the corporate operations, which usually contributes negatively to the overall results. So it will be again a 50-50 split of the revenues to come.

We will see very nice growth in the earnings in both Corporate and Specialty and Retail International. So we are confident that we will see further earnings growth there, a little bit less earnings growth in Retail Germany due to the fact that they are still shrinking. So the results there will be rather stable. And I hope this provides you with some color on the development of the earnings contribution. With regard to the Societas Europaea, the SE construct, there is no capital release related to that one.

Next questions come from Michael Huttner from Berenberg.

Well done. Fantastic. Lots of upgrades. Lots of questions on the M&A budget, can you remind us how much you could spend, you're willing to spend? And if there's anything in the pipeline, I always remember that Mexico and Specialty are kind of areas. The second is on life solvency. So your wonderful IR team highlighted that it has gone up from 270% to 332% in the last quarter in Germany.

I just wondered in terms of capital or cash release, how much of a benefit could that be? And if you could remind us how much you take every money from every year from Retail Germany. I think it's EUR 200 million, but -- and then the more philosophy -- the more complicated question. You're making huge amounts of money in Corporate and Specialty. But clearly, the margins -- or your growth is more selective. So clearly, the margin outlook is possibly shrinking a little bit, I don't know. How does one think about that?

So you start from a high point and go down. That's always uncomfortable, analysts want everything to go up. I don't know how to think about that. Any help the way you look at it. Then a couple of -- Melissa, if you could maybe -- and also exposures to the -- was it First Brands and Tricolor if there were any? And then the last point, I can't quite square the math. So EUR 660 million is the unused budget in Q3. You've got another lot to come in Q4, EUR 613 million. So Melissa presumably would be coming out of that. So if I spend EUR 120 million in fixed income going from EUR 380 million to EUR 500 million in terms of realized losses, I'm still left with EUR 540 million. Are you going to put EUR 540 million in tax? There we are. That's it.

To answer the last one, no, we do not put EUR 500 million in tax. But let me start with the other question. First, with regard to the M&A budget, yes, we have the financial strength to execute M&A, but we remain disciplined here. So discipline is the key. By numbers, yes, we can do a EUR 5 billion deal. Yes, we can do even bigger deals, given that we also have the support from the mutual, which we also always have to take into account when it comes to M&A.

With regard to the pipeline, this remains unchanged. We would love to do something in Mexico or to strengthen also the specialty books. But obviously, price discipline really matters to us. So all these targets have to fulfill return on equity targets and return on investment targets. And it's a little bit also my role to insist on that, and I do so.

So second, with regard to life solvency, which is up, you're right. We have a positive development that meant there due to the interest rate development. So we have lower market risk here. And this leads to the opportunity to take a little bit more money out. So -- but it will remain around EUR 200 million from Retail Germany every year. Also in the years to come, the average contribution is around EUR 200 million, what we call.

Third question was on the margin outlook at Corporate & Specialty. First of all, you're right, we will have a little bit lower margins. There are discussions about price and a lot of discussion also with clients about the expected inflation, which we have to embed in our underwriting calculation. But nevertheless, we are very, very confident to deliver very good results also in 2026 and the years to come.

The next question was on Melissa, the hurricane in Jamaica. Given that Hannover Re has a very high market share in Jamaica, we expect it to be a triple-digit number, which we will have to pay for. But it's okay. This is what we are built for. So -- and it's well absorbed by the large loss budget. So we have no worries with regard to paying that. Then there was a question on the assets on First Brands, we have no -- we expect no impact from First Brands. And I think -- I do not know, Michael, but I have covered all your questions. Or did I miss one?

The last one, what you're going to do with strengthening.

Yes, strengthening. Well, we try to find a little bit more than EUR 120 million in the fixed income book in order to strengthen the return on investments in the years to come. So we expect some of the earnings growth to be derived from a rising return on investment in the coming years.

All right. Thanks, Michael. And then there are more questions from Roland Pfäender from ODDO BHF.

Two questions from my side, please. Could you speak a little bit about the reserving policy going into next year, which is embedded in your new target? Would you expect resiliency reserves to go up, to be stable or actually to come down. So what's the assumption here? Then Retail Germany, the expense ratio, I think, came down for the first time more markedly in the third quarter, below 30%. What would be a long-term target? Do you think you could manage it down in the future?

So first, with regard to the reserving policy, we expect the resiliency in 2026 to remain stable in percentage points compared to the liabilities. So this means a small increase is embedded in our plan, but it's just to give that we are growing to keep that stable. The overall reserving policy, and I really like your question, is the following. We have set out minimum targets for resiliency, but nowhere in the group, we are close to the minimum targets. And we also have set out upper limits, and we are reaching upper limits.

And upper limits we have set out because of capital efficiency. So we are really calculating for actuarial segments what you need in order to cope with the volatility, which is inherent in our book. So you will have a high threshold if you have a small portfolio, which is very focused, which is not very well diversified, then you will have a higher threshold. And if you have a broad portfolio, take Hannover Re, for example, which is very well diversified, you have a lower threshold where we start to have discussions on capital efficiency with the segments on that one.

And we keep that in mind. So I just want to bring that across and the reserving policy for the future is what is driving our thoughts also is that we believe that we have a growing uncertainty that the number of large losses, even though they have been incredibly low during the course of this year, but they will rise again, they will normalize. This is what we embed in our policy.

And the numbers, the severity, what is to be absorbed will rise too. This is in our models, in our thoughts, and I can bring across a good message, we are prepared for it. So second, Retail Germany expense ratio, they will do further steps on the expense ratio in total, but I have to be very careful. They have set out an efficiency program there, which they are conducting. They are slightly ahead of plan. Really. It's really very well managed by Jens Warkentin and his team. So I wouldn't be surprised, let me put it like this, if they were able to reduce the cost by another 10%.

Thanks for your questions, Roland. So let me check the screen whether there are further questions. I'll give you some more seconds to make up your mind whether you want to know anything more. That does not seem to be the case. So thank you for the time you spent with us and give back for concluding remarks to you, Jan.

Well, thank you, Bernd. So thank you for all your questions. I hope I could give you some color on our recent development. And in brief, we have had a fantastic first 9 months. We are very confident with regard to our outlook for both for this year and also for the next year, and we will deliver. Thank you for attending this call.