Ladies and gentlemen, welcome to Zurich Half Year Results 2025 Conference Call. I'm Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mitchell Todd, Head of Investor Relations and Rating Agency Manager. Please go ahead, sir.

Good afternoon, everybody, and welcome to Zurich Insurance Group's First Half 2025 Results Q&A Call. On the call today is our group CEO, Mario Greco; and our Group CFO, Claudia Cordioli. Before I hand over to Mario for some introductory remarks, just a reminder for the Q&A, please keep questions to a maximum of 2. Over to you, Mario.

Thank you, Mitch. Hello. Good afternoon, everyone. Thank you for joining us today. Before we take your questions, I'd like to share a few brief reflections on our half year results presented this morning. Zurich has delivered another outstanding performance through the first half of 2025, continuing the strong performance delivered in the past years. There are 3 important aspects of our results, which I would like to highlight

Group business operating profit reached a record USD 4.2 billion, up 6% year-on-year with each of our geographic and business segments showing positive progression, and this result underscores the strength of our diversified portfolio and the disciplined execution across all business lines; second, core ROE climbed to a highest ever 26.3% over the last decade. This represents a sizable 15 percentage point increase and talks to the ongoing optimization of our capital allocation; and lastly, our financial resilience, underpinned by an SST ratio of 255% at the end of June, coupled with the high cash conversion of our earnings positions us strongly to continue generating attractive durable returns for investors. Now let me briefly touch on the performance across our individual business segments. And I start with Property & Casualty this time. There, we achieved an all-time high BOP of USD 2.4 billion, up 9% year-over-year. The combined ratio improved by 1.2 percentage points to 92.4%, driven by strong underwriting results in both commercial and retail. Now looking at Commercial Insurance specifically, we delivered further improvement to profitability with a 90 bps decline in the combined ratio to 90.5% for the half year. We continue to see favorable growth opportunities in our preferred segments, such as specialties in middle markets. We're also very happy to see the U.S. commercial auto performance showing strong margin improvement after all the underwriting actions we took last year and in these 6 months. The property market is showing a reduction of the higher rates of the past years, but remains attractive and profitable. The liability market, however, despite strong rate increases, is still not profitable enough, and we underwrite it with great discipline and attention. Retail Property & Casualty had a notable progression with a 2.4 percentage point improvement to a combined ratio of 94.1%, supported by rate momentum and underlying improvements to the motor and property portfolios. EMEA motor, in particular, saw an 8 percentage point increase in rate. We continue to see pricing conditions supportive of profitable growth across our Property & Casualty business. You will see in our half year materials we have provided you with additional details on our sizable specialty business. In the first half of 2025, this portfolio generated USD 4.9 billion of gross written premiums at a highly profitable 86.5% accident year combined ratio, excluding cats. We believe our underwriting schemes, data availability, strong customer engagement across a range of diversified business lines differentiate us in the specialties business. This is one of our preferred growth engines. We will tell you more about the strong opportunity we see for our specialty business at our Investor Day in November. In short, the Property & Casualty market gives us a multitude of opportunities to execute on value-enhancing growth in the medium to long term with our usual underwriting discipline. Turning to Life. We sustained last year record BOP of $1 billion, which actually grew 4% year-on-year on an underlying basis allowing for the one-off contribution of 2024 from the conclusion of our German Life back book sale. Gross written premiums up 14%. New business premiums up 20% on a like-for-like basis. They point to a solid foundational platform for future growth prospects. We're particularly excited about the traction of our new Global Life Protection unit. We see a structural opportunity to accelerate growth of capital-light, high-margin protection solutions addressing the prevailing protection GWP across our key markets with a widened offer for customers. Our protection sales grew 3% over the period at an expanded margin of 15.7% during the half year. And finally, turning to the considerable improvement underway at Farmers, they delivered its strongest half year ever, with BOP up 4% to USD 1.2 billion. The Farmers Exchanges reported a combined ratio of 90.5% despite exposure to the California wildfires. Most impressively, the exchanges returned to policy count growth in Q2 for the first time in over a decade. Strong underlying profitability, combined with the surplus ratio in excess of 45% since the exchanges raise their future growth ambition to mid- to high-single-digit percentage growth rate. Farmers Management Services and Farmers Re both contributed positively, with agency brokerages showing strong growth in fee revenues and BOP. The agency brokerages are proving themselves to be a valuable tool both to generate new business and to retain existing customers. Looking ahead, we entered the second half of the year financially resilient and with the strong underwriting culture focused on driving continued momentum across our businesses towards our 2027 financial ambition, which I'll just remind you of now, a compounded annual growth rate over 9% in core EPS from the 2024 baseline of $40.1 per share, a core ROE in excess of 23%, cash remittances exceeding $19 billion cumulatively. Thank you for your attention. Claudia and I are now happy to take your questions.

Okay. Thank you, Mario. We'll take it to Q&A now. Please, operator, as usual, please try and keep questions to maximum of 2, so we give everyone a chance to ask a question. Thank you.

[Operator Instructions] The first question comes from Andrew Sinclair from Bank of America.

First question for me. Farmers doing really well. Guidance, as you said, rising today. Just really wondered how that affects your target for mix of profits with 55% to 60% to come from P&C in 2027. Is that still valid? I know, Mario, you previously said you thought P&C consensus was way too low, and it certainly moved up since you said that, do you still feel that way? So that's question one. And then question 2 is just on P&C expenses. I get there's usually some seasonality on expenses. I get the AIG book might have slightly higher expenses, but really, the increase was probably still quite a bit more than I expected. Just really wondered if you can help unpack that higher expense ratio for us and where that goes from here?

So look, I mean, a quick answer on expenses, you have 2 different phenomenon. The AIG component, which impacts the retail expenses but then benefits the loss ratio, right? So you have 2 sides of it. So expenses would be redefined with that, but also the loss ratio is redefined. Travel Guard business runs at a very low loss ratio, but has something like $300 million of expenses that we might be able to reduce over time, but not eliminate for sure. There are also some investments in the commercial part of the book in order to grow specialties in mid-market, so we've been hiring underwriters, so we've been expanding our capabilities. Of course, we don't have yet the revenues and the profits from that. So I can't tell you if the expense ratio in commercial will stay at this level, will go lower. Chances are it will go lower, but I can't tell you by how much. But these are the 2 main impacts that we have had on the expenses, and they're both not regrettable ones. On Property & Casualty, look, I mean, we never change targets and we never change what we said even because we said that already, I am -- as you can -- as you could have heard from my comments at the beginning, I'm quite confident on Property & Casualty continuing to grow and continuing to delivering profits. And if anything, these 6 months raised my confidence.

Maybe to add on Farmers, your question, right, the fact that we are projecting mid- to high single-digit growth. And it's definitely a consideration based on the acceleration of growth that we have seen coming through, right? So in Q2, actually earlier than we had expected, we've seen Farmers going back to policy in force growth. We expect them to continue on this path. And that's the basis for increasing our view on the potential growth next year.

The next question comes from Michael Huttner from Berenberg.

I have 2, one on German Life and one on pricing. On German Life, I think 2 years ago, you stopped the -- or it was stopped, I don't know how to -- the back book sale of $30 billion. So it's going to be a bigger -- quite a big deal. Now the -- your partner has changed ownership. So the ownership is now more acceptable to regulator. And I just wondered how you're thinking about that German back book sale and also what the economic drivers are because even back then, the cash benefit wasn't going to be massive. And I think as interest rates normalize, you were saying that the solvency benefit wasn't going to be huge, but I think there is another moving part. And I just wondered whether you could kind of explain. And then on pricing, I know you're so positive on non-Life, Mario, which is fantastic. But for me, for analysts looking at the pricing, I'm kind of thinking pricing is down from 4% to 3% overall, probably in commercial lines, somewhere around 2%. And I'm just wondering, yes, but it's great to be positive on the outlook, but the pricing doesn't kind of support that. Now I just wondered if you can give us kind of how we can square the circle here. I think you kind of alluded to in lots of ways, but I'm still a bit puzzled.

Okay. Michael, I'll start with pricing and then I pass it to Claudia for the German Life and what we're doing there. Look, on pricing, give me a few minutes of attention because it's going to be an articulated answer. So first of all, we're moving our books. If you see, we're moving our books towards specialty, towards mid-market. We're reducing the impact of liability. What we did in the motor books was, for example, in commercial auto was a pretty decisive cancellation of policies and contracts, partly contrasted by high rate increases, but we're moving the books. And we moved the books to businesses which have a much better combined ratio. And as proof of it, you see that our combined ratio in commercial is improving. But of course, if you have a combined ratio in the 80s, it is quite difficult to imagine that you're going to have double-digit rate increases. Second, in property, which is often discussed, we see a very stable combined ratio in the 90s. And yes, I mean, the rates are slowing down, but understandably so, if you have been for 4 years in the 90s. So property is still very interesting and profitable even at these rates, and then the future will be decided by the catastrophes in the next months. Depending on what happens, we would see if the rates hike again or continue this trend. Where we are very cautious, and actually, we don't want to grow is in liability because although the rates are quite high, but also the claims cost is high, and the combined ratio stays too high. And so there, we will continuously prune and reduce, especially if it is in the global corporate space. Retail is much easier because the retail is rebounding, rate increases are strong. And there, we're just growth oriented and we think that will remain as profitable as it is for the next visible time. Did I fully answer you on rates in commercial, Michael or...

More than I hoped.

Okay. Thank you.

And just to give you a data point because this is a super important element in our release today. And I think that your view on prices is a bit simplistic. Just a data point, Michael, on our property book in U.S., right, there are valuation adjustments on the underlying exposure that are still north of 7%. This is coming on top of what rates are doing, right? And this is to allow for inflationary pressure for cost increases, so it's over 7%. Deductibles are holding up very nicely. There's no erosion there. We've got average net limits that are coming down. So it's a combination of things that allow us to still print in property a combined ratio below 90%, including cat like wildfires happened in January. So yes, rates is one thing, but you need to look at the aggregate and the aggregate is up very strong margin that we are still able to generate. On the German Life book, so as you said, the completion of Iridium gives certainty to the market. It was important for everyone now beyond the individual transaction to get certainty on the ability to execute back book deals in Continental Europe. So now, there is a certainty in the market. We mentioned before that we continue to be focused on finding the right transaction structure and the right partner for the sale. So we're actively working with the German team to prepare and get through all the necessary steps. There is interest in the market. So we continue to look at our options. We'll update you in due course. Your question on valuation, yes, it's true that interest rates are higher, so the underlying is different compared to 2 or 3 years ago when we started looking into this. However, also keep in mind that there has been a runoff on that book. So that also needs to be taken into account on the valuation of the book. So we are going through that exercise. We'll update you in due course, but we continue to be strategically focused on this.

The next question comes from Fahad Changazi from Kepler Cheuvreux.

Thank you for the additional disclosure on middle market. I was just looking at Slide 8 and given, again, the rate that you have shown and the 87% combined ratio, do you still expect that 87% combined ratio to hold in the medium term in middle market and specialty? And the second question on EMEA motor. It's turned around very quickly. Could you comment upon your expectation of the turnaround and what has accelerated it from the November CMD, where we're looking it to get below 96% by '27?

Look, on mid-market and specialty, let me answer it this way. We have no evidence that the profitability is going to come down. Now I didn't answer your question because your question is, is this going to hold for the long time? And I don't know that. I mean markets can change. I have no evidence markets are ready for a change. And this is also driving us to insist on growing mid-market, small and medium enterprises and the specialty business. I mean they partly overlap each other, right? It's that clear. I mean this is not a missy set because partly mid-market does specialty, so you cannot sum up the 2 numbers. Can I ask Claudia to take care of the -- your first question?

On the combined ratio, yes. So it's true that it's coming through very quickly, especially in Germany, the actions taken by the team are striking, right? They've been going through very, very fast into the combined ratio. There's also a comment on the market to be made, right? The whole market has turned because there was an industry issue as we repeatedly mentioned in the past. So they literally left no stone unturned. They've been acting on pricing in a very sophisticated fashion. They've been increasing new business double digit on their direct platform, which is also very nice, and it's improving profitability. They've taken a number of actions, obviously, on the book on the retention and the repricing. So that's what's guiding the improvement. We've seen also some improvement in the U.K. book, which is SME, not retail, but it's classified as retail in our disclosures. Switzerland has been improving very nicely and Italy, too. So it's a concerted action. A lot of it went through pricing. And you know that retail is relatively quick to reprice. So it's something that can be done on an ongoing basis. The way the teams have been acting to segment the customer basis and make sure that they could put through the right degree of rates in the right segment has been really strong, and we are seeing that coming through the numbers.

And if you go back 3 years and you look at the notes, we said 3 years ago that we expected in 2025 retail to be below 95%. So to me, the anomaly was last year, not this year. This year is going exactly as we expected 3 years ago. Last year was the anomaly with Germany worsening instead of continuing improvement. And then Switzerland also not improving enough as we expected. This year, they are following the track that we expected for retail a while ago. And so it is not a surprise for us this.

The next question comes from Andrew Baker from Goldman Sachs.

First one, can you just remind me the premium now associated with the North American motor business. And given, I guess, the turnaround here and further rate coming through, where do you think that combined ratio can get to? And then secondly, on the middle market growth, I guess the year-on-year growth was held back by the U.S. programs where you highlight, obviously, the focus on profitability. Just curious, was that profitability improvement work anticipated in your $10 billion GWP target for 2027? Or does that create a bit of a headwind there?

So once again, I take the second question, and I pass the first one to Claudia. On mid-market, yes, we knew that we had an issue on the program business, and we knew that we would act on the program business. And so we are committed to the target as we were before, and we're confident that we're going to get there. And if you see the growth has been accelerating in both U.S. and EMEA. And actually, we are ahead of our plan to invest in mid-market resources. And so again, we're confident that the results will be visible. So nothing really unexpected there.

Yes. And from what we're seeing in July and around the middle market book, the core middle market, as it's disclosed in the slides, so ex U.S. programs and ex specialties, it's actually accelerating the growth. So the team expects to be able to grow double digit. So I guess the important thing to keep in mind is that the work to prune part of the U.S. program book has been done between last year and the first 6 months of this year. So you will not see this degree of GWP decrease in the second half, right? So the pruning actions have been largely taken. Obviously, they would still work through the combined ratio. But in terms of gross premiums written, the bulk of it is done. What we expect to see in the second half is a pickup in the core middle market premiums over and above what we've seen in H1. On North America motor, it's roughly $2 billion premium book. So it's sizable. You've seen in the deck, the year-on-year improvement. Keep in mind that last year, the combined ratio was also -- and it's what we are showing in the slide, also included some reserve strengthening, which we've been communicating about, right, to make sure that we are equipped for potential adverse experience. So that obviously increased the combined to the 120-ish that you see in the slide. We are very pleased that this year so far, actual A versus C has been slightly positive. And we've been prudent in the way we have defined the expected loss ratio in the book, given the past experience.

And we expect this book to remain around this level of profitability by year-end.

The next question comes from Will Hardcastle from UBS.

I guess it's just one left, actually. Can you help us to understand the mix of Farmers between motor and non-motor, and then let us know what current price adjustments are on each of those? I guess what we're really -- what I'm trying to get to is sort of understanding in that high -- mid- to high single-digit growth, what is the sort of PIF growth that you're sort of implying in that?

I suspect we need to come back to you with these numbers because I don't think we have it off hand, so we will come back to you with an answer to that.

Maybe what we can already say, Mario, is that the growth that we've been seeing is supported both by motor and specialty products that they are selling. So it's a mixed growth. There has been an acceleration on the specialty side of things, which is one of the reasons why the gross premiums written are increasing more than the earned, right? It takes more time for the specialty policies to run through. They are 12-month policies. So it's growth in both. We'll come back on the exact mix. And it's -- by the way, it's something as well that's being defined dynamically, right? It cannot be perfectly predicted, but they're working on it.

The next question comes from Vinit Malhotra from Mediobanca.

I have actually only one question left after all these questions were asked. That's just a clarification on the expenses because is it -- I mean, I'm just curious to know your gut reaction to this. Is this something that is worrying you a bit? Because from where we sit, we see obviously the underlying loss ratio improving a lot with the expenses eating some of that because of commissions or investments? And is that something that you would have anticipated or we should have anticipated? Is that something you're quite comfortable with? So I'm just curious to hear your thought on that because that's obviously been the focus in an otherwise very strong underlying loss ratio result.

So look, the retail component of it, it could have been anticipated by all of you and definitely it was anticipated by us because, as I said, I mean, we bought Travel Guard, which has roughly $350 million of expense basis, but then has a 20-something percent loss ratio. And overall, this is a very profitable business. It was well known. The commercial component, it was budgeted by us. You did not know that, but it's precisely what we budget for. And so we were fully aware of it. We were supportive. And we think this is absolutely the right thing to do. So I don't see anything worrying. And the central expenses are under control and are coming down. I mean, every other expense item is absolutely under control and will come down. So for us, this is not new, and it's not unexpected and it's not worrying us at all.

And Vinit, the commercial part of it is 60 basis points, which includes the investment in middle market that Mario was mentioning before. So it's a much smaller piece of the overall increase in expenses. The majority of it is the Travel Guard impact and the India's Kotak inclusion in retail, which is partly set up and partly is the run rate change that Mario was referring to.

And if I can get my second one, in the Slide 9 is very helpful on the specialty lines. I'm just curious, between these lines, there must be a lot of moving parts because obviously, the AY CR on the left hand of the chart is flattish to smaller. Is there any commentary that you'd like to share on this right-hand slide, which lines you're focusing more on, is it construction? I presume not financial lines. Is any commentary there that we could use?

Well, look, I mean, construction is our backbone. I mean we are leaders in construction and engineering. So that remains a point of strength of Zurich in the market, and it continues to be a growth engine for us. Then credit and surety also is something that we have been doing very well over the past years, and we are thinking about how we can globalize that and bring it to other customers. Energy is also quite important for us. We're very active in the energy transformation. We've been investing on many of the new energy sources. I think we're very competitive there. E&S had kind of a setback this year because of rates. It was very interesting in the past 2 years. This year, we're not growing that aggressively because we see that the market is softening on rates and the profitability might not be at the same level of the past years, and so we don't plan to grow it. Yes, the other lines are what they are. I mean, you know our view on cyber. It's a very special line of business. We do cyber for SMEs and some of mid-market, we don't go above that, yes. And the financial lines, not much to say about that.

The next question comes from Kamran Hossain from JPMorgan.

Two questions from me. The first one is just on the Life CSM, clearly, kind of came in better than, I think I had hoped at least. I guess given the relatively large moves, should we think about the amortization pattern being any different to how you kind of described it before? And the second question is on, I guess, the areas that you think you can improve in P&C, clearly, in your business, there's a mix shift, there's the middle market, and thanks for the disclosure there. But you called out the commercial motor and the U.S. piece improving today. Are there any other areas that you think you have ability to remediate to kind of keep that combined ratio coming down a little bit more outside of kind of rate and mix shift?

Yes, Kamran, usual sequence, I start with your last questions, and then Claudia takes the first one. Look, yes, I mean, of course, we always have something that we're working on. The program business was known to us and we acted upon that. We want to see this year crop. Crop is an area where we had 2 years ago, bad results. Last year was better, but still not okay. We have reformed the crop portfolio this year very carefully, and we're going to see if this produces the results. And then as I mentioned before, it's especially important for us to continue pruning liability portfolio. We're not pleased with the liability results, with the profitability. I heard that other companies are happy with that, we're not. And so we will continue taking actions either on rates or on canceling some accounts. But we're pretty pleased with the profitability of mid-market broadly speaking. Specialties and even the property portfolio is generating very good returns at the moment.

On the Life CSM question, Kamran, it's fair to assume that the 3% amortization rate that we've seen so far will continue. That will continue to be the range.

The next question comes from Dominic O'Mahony from BNP Paribas Exane.

My first question is just on the financial result within P&C, I'm looking at Slide 13. I was a bit surprised that the investment income here, the $1,276 million didn't increase more. I'm looking at the book yield on the right-hand side here, I think the book itself grew at a fair clip as well. Could you just help me bridge from what looks like a book yield that should imply a sort of a 10% increase on top of a growing book back to a smaller increase in the investment income, what are the other moving parts? And I suppose relatedly, I'm going to try and shoehorn this into the same question. If you're going to grow the [ IFE ] for full year '25, $200 million on full year '24, that implies a really sizable increase in the IFE in the second half. Is there a special reason for that, that I might have misunderstood or missed? The second question is just a very simple one. You've been very explicit in saying that Life BOP profit will be -- is expected to be in line with last year at $2.2 billion. When you gave that guidance that the dollar was in a different place. I have been expecting that, that's a bit of a tailwind to the LIFE BOP profit. Is your $2.2 billion sort of adjusted for the FX?

Dom, I don't think we adjusted for the FX and especially I don't even know where the FX will be because there is volatility there, and I wouldn't predict the FX level by year-end. I wouldn't even try to do that. So I wouldn't try to adjust. I mean, we stick to the guidance, and then we'll manage to come as close as possible or even better than that.

And keep in mind, Dom, that we had last year $150 million one-off. So the fact that we plan for the full year to be in the same range is actually a substantial increase, right, not taking into account any one-offs, and we didn't have any positive one-offs in H1 unlike last year. So it's quite an ambitious target, I would say. On your first question on the NII for P&C, there's one main driver for the increase that's not as high as expected, and that's hedge fund performance. So a significant chunk of the hedge fund holdings we've got is reported through P&C, and it's part of the NII. And while it's positive in terms of mark-to-market and gains in H1 '25, it's not as high as last year. So it's roughly $100 million -- a bit less than $100 million year-on-year. And that's the main explanation for the NII gap, if you will. Your second point, sorry, was on IFE on the $200 million, right, on the full year guidance. Is that?

Yes, that's right. Just to recap on the former point, Claudia, and forgive me if I wasn't clear. I'm looking at the $1,276 million on Page 13. If I understood correctly, the hedge fund gains are within the $36 million. So I understand the point about that. I'm just a bit surprised the $1,276 million didn't go up more.

Yes. There's no particular reason actually. There's some FX that comes through as well on some U.S. dollar-denominated items that have been held in the Swiss balance sheet, but there's nothing more substantial than that, Dominic.

Okay. And on the IFE?

On the IFE, so the unwind of discount is roughly $70 million year-on-year for the first half. For the second half, it probably won't sum up to $200 million. It would probably be somewhere below there, probably be higher than the first half.

The next question comes from James Shuck from Citi.

At risk of focusing on negative things, there's lots of positive things here as well. But Mario, I just wanted to get your kind of insight into U.S. commercial kind of large accounts versus other. There's been a bunch of commentary that it's large accounts that are seeing the cycle turn off a little bit more abruptly. Are you seeing that in your book as well? And if you're able to give us an indication of how much you would classify of your North America commercial premium, how much of that is large account, that would be helpful. And then secondly, just returning to specialty. The mix you've given is very helpful. I guess I'm looking for just a bit more of a strategic outlook here. I know you'll give an update later in November, but specialty can mean many things. And there are a bunch of listed players that do specialty insurers and subsets of conglomerates as well. What are you thinking in terms of kind of Lloyd's platform, Bermuda platform? How much you're actually integrating MGAs into the specialty book? Just really kind of a bit more strategic view for the outlook there would be helpful.

Right. A large corporate, I can't give you a precise number of split, but we have been shrinking large corporates in percentage terms and in nominal terms now since 10 years ago. You remember that 10 years ago, Zurich was mainly a large corporate rider. Now the problem with that was, a, that the combined ratio was relatively higher because of the competitiveness of large corporate, but b, was the volatility because, of course, if you're serving a large corporate, you have a large corporate claim, too. And so when we announced back in 2016 that we wanted to stabilize and reduce the volatility of the business, we also indicated very clearly that we will grow mid-market and SMEs. And we're see there, we're still growing. Where we are today in mid-market and SMEs is the result of 10 years of investments, growth and shifting of the portfolio, and we're continuing that. So I don't see changes. I mean there are a long-term structural reason for us to grow somewhere else than in the large account category. And there are also tactical short-term reasons to do that, and this has remained the priority for us. Then your second question is on the specialty composition and the Lloyd's platform. Look, do we need a Lloyd's platform? I don't know. I mean there are some businesses that don't come if you're not a Lloyd's. Do we badly need these businesses? I doubt it. I mean we don't feel we are limited by that. But yes, it's something that we keep looking at, and we're open without having made the decision. On the definition of specialty, I completely understand what you're saying, and that's why we put in the page a breakdown of what are specialties for us. Because as you said, specialties means many different things, but you see from there what it means for us, where we have competencies, where we have underwriters, where we have data and this is what we're planning to keep growing and develop. Does that answer your question on specialties?

Yes.

Okay. You're welcome.

The next question comes from Andrew Crean from Autonomous.

A couple of questions from me. Firstly, on Farmers, given the strength of the surplus ratio, which is well above your 34%, 38% targets. Could you talk a bit about what kind of combined ratio the exchanges would be happy to accept and whether they'd be happy to go above 100% in order to grow the volumes and sacrifice some of that excess capital? And then secondly, Slide 4, the cash remittances. I noticed your full year '25 bar is more than the 1/3 of your way to $19 billion. Could you talk a bit about that and whether that is just additional cash remittances in full year '25 or whether that's indicating that it's a run rate where you might beat the $19 billion over the 3 years?

So the purpose of that is simply to tell everyone that we feel very safe and confident on the dividend of this year. We have the cash. And we have even more cash than we should have had according to target for '27. The dividend is pretty safe. That's the message. And then let's say, as you know, over the past 3 plans, we have always exceeded the cash remittances targets. And whenever we announce targets, we don't just plan to meet the targets, we always have the ambition to exceed the targets, but it is very early. This is the first semester, and we have a lot more ground to define the targets. On combined ratio and the exchanges, look, I think it's not just the exchanges, it's also us. I mean, we want to keep the exchanges with the proper surplus. As you might remember from the discussion of a couple of years ago, we have no lever to act on the surplus of the exchanges, except for the combined ratio, except for the technical profits. And so we don't mind them having excess surplus, if I can say so. And we don't mind having the combined ratio in the 95% to 100% kind of range. I think probably we're more careful than them because remember, the exchanges are not professional people, and they might not understand completely the volatility and the fluctuations that are possible in the market. We will keep the combined ratio in a kind of range 95% to 100%, and we will try to avoid the combined ratio going above 100%.

We now have a follow-up question from Fahad Changazi from Kepler Cheuvreux.

Sorry, just one follow-up on -- when you're talking about FX. If I look at the Life BOP, the noncontrolling interest increased. Could you just comment, is that in part related to FX? It's probably related to Lat Am. So I'm just wondering if that $234 million is in part related to the FX in addition to just higher earnings?

I don't think this is driven by FX. Let us come back to you on this one.

We're puzzled by your question. We will think back and come back to you with an answer. Can I add and can I ask myself a question and give you the answer because I'm surprised it didn't come. We had a specific effect in Life in Lat Am because sales in Brazil were down because of a transition at Santander in their organizational model and incentives. This has been fixed and it would be recuperated or contrasted in the second half of the year. But that's one of the reason why the growth in protection is -- it was below what we expected, but at the same time, it also says why we say we're very confident on the protection growth because we saw this already corrected by Santander, and they were as disappointed as we were by their sales results in Brazil. And I think they even mentioned that in their call.

Ladies and gentlemen, this was our last question. I'd like to turn the call back to Mr. Mario Greco for closing remarks.

So all right, thank you all for questions and for the interest in our results. Before we close the call, I would like to reiterate our key messages for today. We have delivered an outstanding performance in the first half of the year with a record operating profit and record core return on equity, supported by strong progression in all our geographic and business segments. And our financial resilience with an SST ratio of 255% coupled with high cash conversion, position us strongly to execute in the best long-term interest of our shareholders. See you all in the next weeks and then in November at the Investor Day. Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.