Ladies and gentlemen, welcome to the Allianz Conference Call on the Financial Results of the Second Quarter 2020. For your information, this conference is being streamed live on allianz.com and YouTube. A recording will be made available shortly after the call. At this time, I would like to turn the call over to your today, Mr. Oliver Schmidt, Head of Investor Relations.
Please go ahead, sir.
Thank you, Tracy. Yes, good afternoon and welcome to our conference call. There's nothing specific to be added from my side today. So I hand over directly to Giulio.
Hi, good morning or good afternoon to everybody. Hope you are all safe and doing well. I'm going to go straight into the numbers and then I'm going to be happy to take your questions. So if you go to Page 3, as usual, in the Q2, we start with showing the picture for the 1st 6 months of the year. And as you can see, overall, we had a resilient performance.
When you look at the revenue, they are slightly down. This is due to a slowdown in the Life business, which is clearly understandable considering the lockdown measures we went through. The operating profit is €4,900,000,000 If you adjust for the COVID impact, the operating profit would be €6,100,000,000 which is at the level of last year. When you look at the COVID impact in property casualty, it's about €800,000,000 which is evenly split between Q1 and Q2. And when you look at the COVID impact for LifeHealth is €400,000,000 The majority of it is coming from Q1.
Net income is basically following the trajectory of operating profit. And then when we look at the operational KPIs, the combined ratio is 96.7%. If you do adjustment for the COVID impact, which was a few percentage points for the for the 6 months, you get below 94%. There are other adjustments that, obviously, are negative that we can do, but still after doing all the possible adjustment, the combined ratio is still below 94% for the 6 months. The new business margin is 2.9%, which considering the environment is a very good new business margin.
Interest rates have dropped significantly compared to the level that we had 1 year ago. And then when we look at the Asset Management, when we look at the outflows, we have overall €20,000,000,000 of outflows for the 6 months. But as you might remember, the Q1, the outflows were €47,000,000,000 which means we had positive outflows again in the second quarter. This is a sign of the quality of the business. So overall, I will say clearly, impact due to COVID.
And also, the impact that we are seeing due to COVID is according to also the expectation that we set a few months ago. And then the underlying result is also coming strong in line with our expectation. We move to Page 5 on the KPIs for the Q2. Revenue are down about 8%. This is mostly driven, as I was saying before, by the slowdown on the Life side, where the growth rate has been minus 13%, but that's not a surprise considering, as I was saying before, the major jurisdiction on due to the lockdown.
The operating profit is €600,000,000 lower than last year. Here you can see the impact of €500,000,000 due to the COVID. If you adjust for that and also if you take into consideration that last year we had positive DAC offset, which impacts due to the Life business in the U. S, you can see that operating profit is basically stable at the level last year and also above the €3,000,000,000 mark. And the net income, as I was saying before, is basically following the trajectory of the operating profits overall, euros 2,600,000,000 of operating profit for the Q2.
In the Q1, the operating profit was 2 0.3%. So you can see that as markets became more stable, we see already a lift in the operating performance. But clearly, we still like to digest the COVID impact on our underlying results in the second quarter. At Page 7, we are showing the capital situation of the group. And clearly, we are focusing here on the Solvency II capitalization.
The capital level for at the end of June is 187%, which is 3 percentage point lower compared to what we had in March. So it's a light movement downwards. The solvency ratio remains at a good comparable level. When we look at the sensitivities, we are pretty much unchanged compared to the sensitivities that we had in Q1. And then I just want to draw your attention, you can see a comment at Page 8.
As we already discussed in the press that we applied for transitional for Allianz payments with Zichiro and also for Apicafau. And this would lead then to a solvency ratio for the group, including transitional of 2 17%. But as also said before, we're going to continue to be focused on managing clearly the solvency into the for the group without the inclusion of the transition of Asia for Alianta's treatment in the Arctic Afao. If we go to Page 9, this can give a little bit of color on the drivers of our solvency ratio in Q2. You can see that the organic total generation has been healthy on a pretax basis to dividend basis with plus 5%.
But then you can see that the pretax market impact was minus 10%. And the reason for that is basically credit spreads narrowing on the corporate bond side, which is a negative for us. And also another element that we can discuss later in the call is that our portfolio is more quality compared to the reference portfolio. And what we saw in the second quarter was a narrowing of the spreads, especially on lower quality corporate bonds or on the financials. We are underweighted financials of Caribbean Insurance Company.
We don't want to double down. And this leads also to sort of basis rates, which can impact our solvency ratio. But that means the ratio is particularly stable compared to what we had at the end of Q1, so no major development there. Now if you go to Page 11. As usual, we are showing the growth in property casualty for the selected entities.
First of all, when you look at the growth in the Q1 for the segment, you can see that they were completely slightly negative. That's also a consequence of the lockdown measures. There are a couple of maybe I see on the numbers that might be a little bit interesting. I will focus right now just on the AGCS side because it's probably 25% is has to do with the front end business. If we remove the front end business from the numbers, the growth rate at UGCS will be 5%.
And as you can see, this growth rate is driven by rate changes. So that's a high growth rate because it's not driven by chasing volume, but it's driven by hardening the market also taking action on the pricing side. Overall, when you look at the group, you can see that there is an acceleration of rate changes on renewal. In Q1, the rate changes were 3.9%, as you look at the 2nd quarter, they are 4.5%. And I would also say that the acceleration is mostly driven by AGCS.
Now if you go to page 13, we can see that the operating profit for the segment has decreased by about €240,000,000 €140,000,000 of decrease is due to the underwriting results and €100,000,000 is due to the investment results. When we look at the underwriting results and the combined ratio, clearly, we have the impact due to COVID. For the second quarter, the lucky on the net cat side because the net cat load was only 90 basis points. Usually, we would expect the net debt load to be more like 200%, 2.1% for the second quarter. Then you can also see a very good expense ratio, 25.7%.
Here, we had a few one offs that have to be adjusted. Adjusted for the one off, the expense ratio will be still very good at 27%. And then you can see that the runoff is only 80 basis points. And here we have been deliberately on the conservative side because clearly there is some always some uncertainty about what might happen in the future. The point is when you start adjusting the numbers for the COVID or for the higher for the lower net cash or you normalize the runoff and we adjust expense ratio for the one off.
And with all these adjustments, we end up for the Q2 with a combined ratio, which is definitely below the 90 4% level. So that's again a sign that the underlying performance is healthy. When we move to Page 15, here clearly, we see that the COVID impact had diverging effects on our entities. Maybe just a couple of comments. One is on the AGCS where you see a combined ratio of 100 17%.
They're off 18 percentage points is due to COVID. So if you adjust the AGCS numbers for COVID, you get to a 99 combined ratio that would be in line with our expectation. Then you can see here that Euler Hermes, the combined ratio is over 100 or 101, which is according to the expectation that we have in this environment. And then otherwise, you can see a lot also very open combined ratio, which is a reflection of the underlying performance, which is good plus in some cases, we may have benefited also from lower frequency. In the United Kingdom, then you see €200,000,000 operating profit, which is a consequence of a one off of about €100,000,000 That's also the one off, which is impacting the expense ratio for the segment.
Now moving to Page 17. The investment income is about EUR 100,000,000 lower compared to what we had last year. Here, there are technically 2 drivers on the I would say almost 3, but it's 2. 1 is the lower interest rate level, But this has to do also with lower interest rate level, for example, in Turkey. So this is also something that we need to consider, which doesn't which means also not necessarily one to 1 in operating profit impact because on the other side also, in reality, there is lower inflation, lower interest income, but also lower combined ratio.
Partial is also due to conversion from emerging market currency into the euro when we do clearly the consolidation. So these are some effects driving down the operating investment income. But in Q2, we had also clearly lower dividend, which is a reflection of two factors. On the one side, we reduced our equity exposure and then there is also that companies are paying less dividends. So these are the driver for the development of our operating investment results, which is actually not so far from our expectation.
We have always taken conservative view of what might happen to the investment results. So from that point of view, the drop that you see in the numbers is not necessarily a significant drop compared to the outlook that we had for the investment income for 2020. Now moving to Page 19 on the Life side. As I was saying before, clearly, production is down. That's a consequence of the lockdown measures.
Production was significantly down in April May. But when you look at June, you can clearly see recovery. So from that point of view, this is just a temporary issue that eventually is going to go away once the COVID situation is going to one day resolve. What is good is the development of the or the level, if you want, of the new business margin, which is 3.1 percent. That's a very good level considering where the interest rates are right now.
And this is also clearly the results of all the actions that we are undertaking to sustain our new business margin in a lower interest rate environment. So we are very happy with the work that we are putting on trying to keep this KPI at the best possible level under these circumstances. Now if we move to Page 21 on the operating profit for the Life segment. Overall, we have about €1,000,000,000 of operating profit, which is a good result. It's clearly down compared to what we had last year.
But you should remember that last year, we had a positive one off from the deck in the United States. And also last year, we were still consolidating Banco Popular. And so from that point of view, I will say that EUR 1,000,000,000 is very close to the level last year. It's a little bit lower compared to our plan divided by EUR 4,000,000, and that's about EUR 100,000,000 which we quantified as also being COVID related. This is the consequence at the end of the day of the volatility that we still see, especially in the United States.
The mix has been a little bit more elevated compared to a normal expectation. And this has, as you know, an impact on our FBA numbers in the U. S. But overall, with EUR 1,000,000,000 of operating profit, good quarter. If you remember, in Q1, the operating profit was about €800,000,000 So you can see how we are getting a peak up in operating profit very quickly when the situation is just stabilizing a little bit more.
At Page 23, I would say the very good noise, if you want, the picture is that when you look at the new business margin, basically all companies are showing new business margin above 2%. So that's a reflection of the efforts that we are putting across the board to make sure that the Nungus' margin profitability is resilient. And when you look at the operating profit, the only real starting thing is the development in the U. S. But again, it's a reflection of the one off last year and plus the elevated volatility this year.
Otherwise, generally, you see a lot of stability in the numbers of other ways. And Spain, as I was saying before, is a reflection of the consolidation bank or mainly a reflection of the deconsolidation bank of Pura. Moving to Page 25 on the investment margin. You can see that the investment margin expressed in absolute terms also in relative terms is stable. But clearly, when you look at the current yields, you see that the current yields went down significantly in the quarter compared to a year ago.
And then on the other side, the harvesting has been higher. On the current yields, the main factor for the drop is that we receive less dividend in Q2 because clearly dividends are kind of drying up due to the COVID situation. So if you adjust for the dividend and you go back to more and more level of dividend, the current year would be more like 96 to 97 basis points. So we have a little bit of a delay because of the dividend. But overall, when you look at the investment margin, it's relatively stable and also broadly in line with our expectations.
On the Life side, I would say new business margin are holding. The operating performance has been good at €1,000,000,000 So you can see in normal market condition, we can operate successfully on the Life side. Moving now to Asset Management at Page 27. Overall, our Asset Management have increased by 5%. You can see there was an increase both at PIMCO and AGI.
And then I will go straight to Page 29, because here we are focusing especially on the assets under management, the 3rd party assets under management. Overall, they went up 100 €1,000,000,000 in the quarter. This is mostly driven by the market development. Clearly, the markets have recovered, so that was helpful. Exchange rate had been negative for us because of the U.
S. Dollar depreciation. But then the real positive news is that we see positive flows both at AGI and also at Tinto. And again, beside the month of March, which was very tough from a flows point of view. We had positive flows in January, February and also in the Q2.
We also see positive flows at PIMCO right now. So at the end of the day, there was really a situation in a couple of weeks, but the strength of the franchise is again very strong and the numbers in Q2 are showing that. At Page 31 on the revenue side. For Asset Management, we see a decline of about 3% on an internal basis. This is a consequence margin.
Clearly fee margin. Clearly, here, as usual, we need to be cautious when we look at numbers on a quarterly basis. When we take the 6 months view, the revenue up 3% on an adjusted basis and the pre margin down only 0.5 basis points. So I would say that the 6 months view gives a better picture of the performance that we have on the in Asset Management. Coming to Page 53.
Your operating profit is good at €640,000,000 There is a decline compared to the prior period. This is due to the lower performance fees. And to a certain degree also to a higher expense ratio. I would differentiate between PIMCO and AGI. In the case of PIMCO, there's just some volatility here on a quarterly basis.
If you look at the 58.6 percent costincome ratio for PIMCO is what we would generally expect. In the K2O AGI, there is also some volatility, but I would also submit that 2.3 is definitely not the number that we are looking for. And this is also the reason why, as you already know, we are taking cost measures at AGI. Overall, results are good. When you look at the Q1 view for Asset Management, the operating profit is up 5% compared to what we had last year.
So a very good first half of the year for our Asset Management operation regarding the operating profit. Page 35, corporate. You can see lower investment income operating profit compared to last year. This is driven basically by the investment income. Also here, we see the effect of lower dividend.
Here, we expect this to be temporary. Eventually, dividends are going to flow back into the system. But for the Q2, clearly, we saw a little bit of a drag coming basically from lower dividend income and also it could be from lower interest income. And then at Page 37, as usual, we are showing the non operating items. Overall, I will say there is really nothing I catch here.
The only thing might be the tax rate, which is a little bit higher or significantly higher compared to last year. Again, here is some volatility between quarters. You might have on the tax side some policy on NSE to up, so smaller to up, but it's going one direction 1 quarter and they go in the other direction in the other quarter. The other year, they can make a little bit of a wider gap. Where you see the 6 months view, the tax rate is 24.8, which is just 1 percentage point higher compared to what we had last year.
So indeed, a very normal level of tax rate. So coming to Page 39. Overall, I would say with a robust performance, Clearly, there's a different situation. We have an impact coming from COVID. The impact coming from COVID is also according to what we have anticipated.
What we do clearly in this environment, we are focusing even more on the things that we can control. And when we run our analytics and we are looking at the underlying combined ratio, we see that the underlying combined ratio is developing in relation with the low to the expense ratio. Adjusting for the positive one off, we still have an expense ratio, which is just slightly north of 20 7%. A couple of years ago 2, 3 years ago, we were closer to 29%. And also, as you see, we are doing put a lot of effort on the new business, Mardi, to make sure that we are adjusting the products and also the mix through the reallocate of a very low interest rates environment.
So from that point of view, I will say that our performance is again robust in what we can define as a challenging environment. But despite a challenging environment, we are providing solid numbers. And with that, I would like to open up to your questions.
Thank you.
Thank you very much. I guess the first and main question, Giulio, so I was wondering if you could just tell us where you see the remaining sort of uncertainties from here. I think I'm right that your sort of €800,000,000 to €1,200,000,000 sort of estimate that the claims impact still stands. But I'm just wondering if you could sort of update us on the moving parts. And in particular, I guess, you were sort of standing a little bit cautious on sort of the motor experience in the aftermath.
I'm wondering if that's still the case. And related to that, if you've decided not to give an outlook, at this point, there is no issue on that. But I sort of understood from introducing a few weeks ago that you might be considering that. And I'm just wondering where the major uncertainties are that could cause you not to do this at this stage. And then if I can, a small one on Asset Management.
I appreciate you sort of said looking at the 6 months view is probably the best one. But if I do just look at due to it, it looks like volume mix was a little bit responsible for the lower margins. So I'm just wondering if that's sustainable or whether we can expect that to reflect quickly?
Yes. No, thank you, Peter. So maybe let's start from the uncertainty. The uncertainty is not related to what we have seen, but what might happen in the future. So if you think about that, we are still in a situation where Melbourne is going on a lockdown.
We see there are outbreaks here and there happening in Europe. The situation in the U. S. Is kind of unstable. So the uncertainty that we are referring to is more about what might happen in the future.
When we look at what happens, in reality, things are coming along the way we basically expected. So from that point of view, we had so far €800,000,000 of impact in our numbers in P and C. We know that we are going to see a negative get to plan in the Hermes and to a certain degree also in travel. So when we run the numbers based on what we have seen so far and what we know so far, we would say that the impact due to COVID and our underwriting results should be by the end of the year $1,000,000,000 plus. So we're still there.
On the motor side, we saw basically the numbers that we're expecting to see. So there is nothing there is clearly some uncertainty potentially on what might happen in the U. K. Or in Australia about business interruption. But from that point of view, I will say that we think we took overall reasonable conservative stance.
It doesn't mean that we might not see some deviation, but there should be management. So the uncertainty we are referring to was not so much to do with or it's nothing to do with what we saw. It's more really about the credit we are in August. And when we go through the corridors here and the holes in Allianz, we still do with masks, right? So we just need to understand that we are not out of COVID.
There is speculation whether we are going to have a COVID-two or not. And so from that point of view, we felt that given the uncertainty about what might happen, maybe it's not really absolutely necessary to come up now with a new outlook because they are excited about the future as to why. But that's it. So we're not to read anything more than this. On the Asset Management side, yes, as you pointed out, there is a little bit of a mix effect.
And the point is that the share of mutual fund came down a little bit compared to the institutional side. This has not so much to do with inflows. This has to do also with the market movement that we saw on the different assets classes. So I would say this clearly this can move over time, but my expectation for the free margin is that this is probably going to stay at at this level as we move forward. But again, these are just movement that you can see time by time.
It's not necessarily a pressure because there will be if you see really pressure coming on the fee margin because
of competitive reasons,
I think it's more than we saw in the press.
We will take our next question from Andrew Ritchie with Autonomous.
Autonomous. Some quick questions, I think. First of all, just a simple one. Why get transitional approval? I mean, I appreciate your next door neighbor in Munich has always had that in their pocket, as it were.
But what are the circumstances you would think it relevant to start sort of shifting to that measure? Because I think you stressed that for now, capital management excludes it still. So why feel the need to do it? Second question, it's really a broader one. Julian, I mean, obviously, you've managed the U.
S. Life business for some time. The level of interest rates in the U. S. Has been a dramatic change year to date.
Just clarify, what products what kind of products actually work at this level of interest rates? And also, does the interest rate effect on the U. S. Life business solvency position, I presume that's very delayed given the RBC system doesn't really mark to market. And do you think that the low interest rate pressures are already captured, I guess, in the group's sort of Solvency II for the U.
S. Life business in particular? And the final very quick question. I assume your guidance on TNC COVID claims, so €1,000,000,000 to €1,200,000,000 for the year, does not assume an adverse outcome from the various court cases that Allianz is involved with on BI?
Okay. So maybe we start with transitional. On transition, the point for our decision has been based on the long term review of Europe, there was also a consideration that transition might not be allowed in the future. So you cannot ask for transition in the future. And so that was the point where we said, okay, we don't want to be in a situation that one day we might not be able apply for transition because we're going to have this kind of option.
So there was the trigger points and reality we thought about that already at the end of last year, and that's where we also basically decided to go down this route. So that's the action to if you want to that potential measure that might come with a long term guarantee review. On the USA side, maybe starting from the RBC, yes, the RBC will not necessarily capture consequences from lower interest rates. But in the U. S.
A, you still need to do a cash flow testing kind of things. So from that point, if you see a problem, that will be reflected there. So clearly, the RBC measure, as you said, is a little bit less market oriented. So you're not going to catch a few things right away like Solvency II might do. But on the other side, you still need to do some stress test, cash flow testing.
So from that point of view, if there is any issue I couldn't capture by doing that testing. On the U. S. A. Business, you are right.
I've been in U. S. A. For a long time. And I'd like to say that I never saw something like what we are seeing now.
So the beauty is that a couple of years ago, we have introduced the IVA product, which is basically the Pyximus annuity product from an economic point of view, but that's in the NBA chassis, which basically allow that you can expose the customer also to downside. And once you can create structure that can also expose the customer to a downside, then you can create structure that's from a hedging point of view, more economic cheaper. And this allow you somehow to even if you have lower interest rate to clearly create optionality that you can hedge in a with a lower budget. And you clearly depend on how you cut the risk reward profile for the policy order, then you that's the way you create a value proposition. So that's number 1.
And as you see, the IVF production is already going up. The second point, I just tell you that there is also lobbying effort in the U. S. In order to lower some of the minimum guarantees on the fixed index annuity side. So that's also something that it's discussed now and there is a lobby effort.
So lowering the guarantee also on the fixed industry annuity side from the level where they are now from a regulatory point of view, that might also be helpful. And then sure the point is also and this is not just really for the United States, this applies also to other countries. At the end of the day, we will have to think about introducing riders, also having a little bit more of loadings into the product. So we need clearly to think about the value proposition in a different way. When I talk to my U.
S. Colleagues, they are confident that despite the low level of interest rates, they can come up with solutions which are good from a customer point of view. There is a value proposition for the customer and also that we can have a good new business margin. On the new business margin, I want to tell you something anyway. I'm not going to lose my sleep if eventually we are not going to have a 3% of business margin, but we need to settle to a split which is lower than that.
That will still be, in my opinion, a good level of performance from that point of view. Yes, I would also say that 3 percentage point to new business margin is a good number. But it's also a little bit of an arbitrage number, if you want, and also operating a little bit at the level less than that, that will be absolutely acceptable if we had to go there. Clearly, we're going to try to keep the 2% level, but it is not absolutely necessary. And that was a final question on the court cases.
At the end of the day, we are not assuming the worst case. The point is you have to think about our reserving like you have first of all, let me say that most of the reserve we have now is R and R. Then we put together a look at the best case and worst case. In all the situation that we are not necessarily picking the worst case for our situation because usually you have some diversification. So from that point of view, I will say we don't have a worst case in our reserving.
But overall, I would say we have a we tend to go conservative. But here in a situation like COVID, you might not you cannot disclose that potentially we might see some number which is higher than what we have reserved for. But I think as usual, we have been taking a conservative stance.
Great. Thank you. Thanks.
Thank you.
We'll take our next question from John Hocking with Morgan Stanley.
Good afternoon, everybody. I've got 3 questions, please. Just to come back on Andrew's question about the transitionals. Just to clarify, are you going to be reporting the solvency ratio going forward, both including and excluding the transitionals? That's the first question.
2nd question, just looking at the sort of resumption of lockdowns in various parts of Europe, etcetera. Can you talk through a little bit about the risk here from a sort of one event, two event situation on P&C and how that might play out in reinsurance? And then finally, on the buyback, the second half of the buyback is, I think, officially suspended. Is there any realistic chance of the buyback coming back? Or should we view that as being canceled?
Thank you.
Okay. Starting from transitional, we are going to basically disclose now, so the focus of the number without transition also when we're going to see our presentation. And moving forward, you're still going to see the same presentation the way you're seeing right now. Then on the buyback, I will say it's still deducted from our Solvency II calculation. We're going to take the decision as we go into the second after the summer break.
If you look at the sentiment out there also from a regulatory point of view, I will say the sentiment is not conducive, let's put it away, to buyback. There are even sometimes conversation about dividend payment. So from that point of view, I would say it's more likely than not that we will now go ahead with the buybacks considering the situation, but we are not taking the final decision yet. And then you had a question on the lockdown, but it was not I couldn't understand the question.
So I was just thinking, Jimmy, whether you've gone back to some lockdowns in some countries, is that going to cut us two events for reinsurance and how do you think that's all?
Absolutely. So I would tell you, I'm not a reinsurance expert. I would say that if we have a second wave, that would be definitely, in my opinion, consider another event. In reality, the conversation with the insurance company are going to be about how you interpret also the first kind of wave, how you aggregate losses from aggregate losses. But the second wave, that will be, I will say, most likely interpreted or classified as a new event, but I would say the most likely implementation.
Okay. Thank you. Welcome.
We will take our next question from Michael Kuttner with Berenberg.
And on the solvency, if you don't have the tax equity driver,
it should be around 190%
to my third question. And then on
the claims, you kind of implied that most
of the claims at the moment are estimates that you actually haven't seen any reported. And the question I have here is, why is your ratio so much higher than I know you can't comment on peers, but Perfect reported, I think, 88%. You're reporting 101%. It seems a huge gap. And I just wondered what is the extra conservatism that you're building in?
And then a final point is also on just on the U. K. If I adjust the U.
K. For the one off in
the pension, for the 16 points, I have a ratio of 89%, which is fantastic. And I'm just wondering whether it's sustainable or is
there any
kind of extra positives that's this one off in character?
So on the solvency ratio, if we strip out the buyback for the numbers, the solvency ratio will be about 2 percentage points higher. And on your questions about the claims, if I understood the question, probably you are saying that our numbers is higher compared to competitors. It might be that we are more conservative and I'll speak about that. I think it depends also on the business profile, right, because this makes a big difference. You should consider that, for example, in our case, if you had Q1 and Q2, I will say that about $100,000,000 losses are coming from AGCS business.
And clearly, if you might be a competitor not having the same kind of exposure to the industrial business, you might see less losses. On the other side, you might see competitors with even I saw even bigger numbers in some cases. So on the COVID numbers, because I'm also looking what is happening, I would say you can see significant numbers larger than ours. You can see also numbers smaller than ours. And I tell you the answer is always look just at the business profile.
This is going to help you a little bit to understand why company might have higher numbers and other company might have lower numbers. On the U. K, yes, you're right. If you adjust for the one off, the combined ratio will be about 90%. I would like to tell you this is the new target, but that's not the case.
I would say there is also a little bit of improvement due to lower frequency in most of the U. K. So when you adjust the numbers, I will say that you are very close to the 95 percent combined ratio that will be also the expectation for the U. K.
K. We'll take our next question from Nick Holmes with Societe Generale.
Hi there. Thanks very much. Two questions, please. First, can you explain more about how the cost effects work? And in particular, how much of a link to the policyholder capital?
I'm thinking the RFP in Germany. Is that the bit that's difficult to model? And then secondly, coming back to the transitional benefits. Again, sort of similar question, is there a link here to the cost effects? And is that why you're drawing our attention to it?
I mean, if you did implement transitional, would that reduce the cost effects?
Okay. Maybe I'll start from the transition. No, I don't want to take you to transition just because we apply for that. And that's in theory also our official solvency ratio, but there is no other reason for that. And coming to the cost effect, okay, the first question was if what is driving the cost effect clearly is a major difference when you adjust the interest rate and when all the things are going down at the same time, I would say to say that they're going to get a little bit more of an impact.
It's like if you have an option, you are moving at the same time the interest rate volatility and so on. The addition is always going to be the data that putting together all the elements is going to give you a little bit more of an impact, positive or negative, depending on the trajectory. You touched a good point anyway with the policyholder participation. I will say that overall, yes, the sensitivity, if you want, to the solvency ratio, not only the cost effect, but also the sensitivity of the solvency ratio is a function of, if you want, also the level of buffer that you might have. Now the RFP has not changed, so this is not a driver for a different level of volatility.
But potentially, yes, if you have a lower level of FX pay, which is not the case, you would also have more sensitivity. The same applies to if you have unrealized gains or not. The higher the annualized gains you have in the local accounting, the more resilient is going to be the solvency ratio. In our case, we have a substantial unrealized gains. If you have less annualized gains, you're going to see more volatility.
One thing which is critical anyway to understand the volatility of the solvency ratio, Don't forget that's a risk neutral calculation. So which means you are basically doing a projection assuming right now interest rates which are basically close to 0. And every time clearly you do a risk neutral calculation which is a little bit if you want far away from what the real world calculation would be. Even if interest rates are low, still a risk neutral calculation is different anymore. So every time you do a projection with basically no interest rates, clearly, in that situation, you're going to have some pressure on the solvency ratio, especially when you do a stress test.
You are calculating your own fund, assuming that there is basically no return on your assets. That's the first thing that you do. And then when you do the ACR calculation, you're going to say, now I'm even testing that things are going to get even much worse. So it is the level of interest rates, which is predominantly driving, if you want, the volatility of the solvency ratio. We can debate if there is neutral calculation is the right approach to do a solvency calculation, but that's or a solvency calculation, but that's where we are, right?
And so from that point of view, it's our job to manage also the solvency ratio the best way we can. It's been helpful.
Yes. No, that is very helpful. Can I just give you a follow-up very quickly? Is it possible to say sort of what proportion of the process acts are linked to the RFP and the policyholder capital? And then secondly, sorry, just to ask, if transitionals were actually implemented, would that remove most of the cross effects?
I mean, it's just weird that you have such big cross effect versus peers that have much, much less, and they obviously have less RFP, hence
my question.
I would say that you cannot decompose the cost effect in what is LFA or not. I would say the level of LFA that you have is going to determine what is the volatility of the solvency ratio and also at the end of the day is going to determine what is the volatility coming from RFP from the cost effect. But you can also say the cost effect, 3 percentage points is due to RFP, 4 percentage points is due to non RFP. So the more RFP you have, the less sensitive you're going to basically be. When you do the SEI calculation, this sensitivity is going to this lower sensitivity is to apply to everything, to your interest rate sensitivity, to your equity sensitivity and eventually is going to be also diminishing if you want the cost of sensitivity.
So that's one. On the other one, what Transitional is doing is not changing reality the ACR calculation, which is where you see the impact coming from the cost effect. It's just giving you more own funds. So from that point of view, transitional is not going to change that because it's just that you can recognize more own funds compared to what you do in the calculation with the transition.
That's very useful. Sorry, just one very quick final question. Are you going to do a small explicit guidance on the cross effects?
Yes. We put a comment because we said that we're going to do this. So if you go to Page let me see, this Page 10, right?
Page 8.
Page 8. Page 8, you're going to see a comment about the gross impaired 7 percentage points? Yes. Yes.
Yes. Yes.
But are you going to align that to market movements or leave it to us to infer?
No, we are going to give you an update every quarter. So the gross effect there means that when you do a 50 basis point drop in the interest rate, I think, 50% movement in the equity. And then also you have a 50 basis point wide in your corporate spread where you take all these combined. Compared to the sensitivity you see at Page 7, you need to add 7 percent. So you can go to Page 7, you add up all the sensitivity and then you add up 7, and then you get the number.
And we're going to provide you this because the data can change over time, obviously. We're going to provide you on a quarterly basis with the numbers so that this can help you a little bit to specific class significant dislocation in the market, which might help you to do your estimates. That's very clear.
Thank you
very much.
Welcome.
Our next question comes from Farooq Hanif with Credit Suisse.
Going back to the subject of reinsurance. So my understanding is in the €800,000,000 to €100,000,000,000 sort of roughly €1,000,000,000 guidance given on COVID, you haven't made any material assumption about recoveries. At what point could you start having to go to reinsurers when you have reported claims? And what kind of estimate could you give us on the number of recoveries that you could make under a nat cat quality for COVID? That's sort of question 1.
Question 2, on the Life Investment Margin, you historically had a sort of 80 bps to 85 bps guidance. Things have changed. I think you said you would be close to 80 or less. Can you give an update given current conditions, assuming that they remain fuller interest rates going forward, what that might do to lighten the margin range? And last point is, again, on the transitionals.
I know you've applied for these basically because it's particularly OPPA. Does it change the quality of the conversation with Bakken though? Does it make that a little bit different?
Yes. So on starting from reinsurance, as you said, we didn't take any material number yet in our financials. So I would say we had a little bit of a recovery, but it's not overly material. We are already talking, by the way, to the insurance companies, but this is going to be a long process. Eventually, we could really think of recoveries, which goes in a few 100,000,000.
But again, I will say I'm pretty confident that regional companies are going to have a different idea. We'll have a business conversation between business partners, and then we will see what the outcome is going to be. On the point of the investment margin, I think the last guidance was more 75 basis points. And we also know that the number progressively is going to go down. On the other side, you have also a higher equity base.
So the investment margin in absolute terms might stay relatively stable, but the margin expressed in relative terms is going to go down. But as we discussed also in the past, that's also where we expect that other profit sources are going to provide some support like loading fees. You didn't see this quarter clearly because of the COVID. But if you look a little bit at the trend over the last few years, you can see the loadings and fees are going up. So the situation is going to be the following.
Other profit sources are going to go up on the investment margin. In relative terms, we are going to see clearly investment margin, which will go down also to 70 basis points. The amount of reserves should still increase and this might keep the investment margin more or less stable or in an absolute level. So that's more or less the feature that you should expect moving forward. And then you had a question about the quality of our conversation But I think that's clearly what our conversation with is not going to change because of transitional.
And that's a measure that is a discretionary measure because of the fact that eventually there could not be a possibility to apply for transition. As you know, by the way, in the German market, it is very standard to have a transition. So I would expect that the quality of our conversation with Bobby, which is very good, by the way, is going to be the same with or without transition. So I don't expect major implications, both positive or negative. It's a pure precautionary measure.
If you ask me clearly, eventually, it's like positive, clearly. It's always good to have that in your pocket. But fundamentally, it's not going to change the way we are managing the companies that are applying for transition. So the management of those companies is going to remain the same. I will say, yes, it might be a slight positive, but fundamentally, I will say, it's business as usual.
Okay. So that's really fair. Thank you so much.
Your next question comes from Vinit Malhotra with Mediobanca.
Hi, good afternoon. So my two questions. First one would be just getting a bit more clarity on the P and C Investment Income, please. So the reinvestment deal is being sort of stable year on year, but the collapse in the similar income, you should mention obviously dividend. But could you help us understand that as well, there was anything
that all of it fulfilled
then or I'm just I'm just trying to understand a bit on how to think of it in the future. Also in the similar context, I was thinking that the alternative assets would be helping offset from all this. If could you comment on whether that could help? The first one would be second is on asset management fees rate. We've talked about product change.
But could you just explain that a bit
more because when I see the flight to July and that the mutual funds were sizable part of this gain flow in the Q3. So maybe if you could just comment on which kind of products are these which are lower fee rate and whether that's the projections we should think of? Thank you very much.
The point has to do with the reality, the institutional side of the house, the performance has been, if you want, stronger, not in the face of the relative performance to Benchmark, but just there might be a longer duration. And so there was a little bit better of more increase in assets under management in those strategy compared to the mutual funds. So it's not a change in product mix that we have initiated or different charges that we are charging on the different asset classes. It's just a mechanical effect of how the market value of the different asset classes have been reacting over time. You need also to consider that we are comparing now Q2 basically to the situation of Q2 1 year ago.
And maybe just to be clear, mutual funds have higher fees compared to institutional funds. So let's say once you have a change in mix because of market movement or whatever you're going to have automatically a lower fee margin. But it's nothing to do with us changing strategy, let's put this way, with us changing fees. It's just a mechanical effect of the change in market value of the mutual fund versus the market value of the institutional funds. With respect to your question about the alternative assets, yes, the alternative assets might help, but they may help in this space that otherwise the overall level will be lower.
Stay when you have less dividend on public equity or you have a drop in the interest rates. Clearly, you're going to see the investment result is going to go down. So definitely, alternative assets are helping our investment performance, but eventually they cannot clearly remove the direction that you might have when dividends are not paid. With regard to the expectation moving forward, I would say that if you take the 2nd quarter numbers of €640,000,000 I would say that's what you should basically expect moving forward. Maybe I would probably caveat.
On the one side, usually the next thing you see is slightly positive. So you should say the number, if you normalize over time, is most likely negative. So you might even discount the 6 40 bps. On the other side, I will say, one day yes, maybe we're going to see a little bit more dividend one day. But for the time being, we are taking on the P and C side a conservative asset position.
So from that point of view, we are not holding a lot of equity anymore. So for, I would say, at least the next 12, 18 months. I would start from a number which is slightly below the $640,000,000 and annualize the number to have an idea what the estimated income might be moving forward. So I can translate for you and can do the math for you right away. I will say that an investment income annualized of €2,500,000,000 there might be an indication what you might see moving forward.
But we cannot see the future either, right? So we will see what time frame, but I think with 2.5, you shouldn't be awfully off.
We will take our next question from Ashik Musaddik with JPMorgan.
Just one question I have is on solvency capital. I mean, your solvency ratio is about 187 at the moment and you mentioned that because of some M and A, I guess, it will be 3 percentage points lower. And if you look at this quarter so far, I mean, interest rates have come down further and spreads have tightened further, which will be again negative for your solvency ratio. So if you ignore the transitional concept, I mean, you are kind of reaching the low level of solvency that you have always targeted. So how comfortable you are with that?
I mean, how you are thinking about that solvency ratio? How should we be expecting that you will do you will take some management action to get an update on the solvency ratio? And just one last question on just again related to solvency. I mean, is solvency ratio any trigger for you to bring back the remaining buyback or is it just you're waiting for strategy around macro or I mean do you need to be at around 200% then only you will release that buyback of $750,000,000 that is remaining? Thank you.
Maybe starting from the buyback, the announced buyback is more deciding whether we are going to execute on that or not is more a consequence of the regulatory sentiment because once we announce the buyback, clearly, our inclination will be to treat it similarly to the way you might treat the dividend, but the buyback is really different. So from that point of view, the buyback, you see, just going to be driven mostly by the regulatory environment. So this is going to be point. And as I was saying before, right now, it doesn't look like the regulatory environment. It is conducive to buyback on the solvency ratio of 187.
First of all, I would say 180, as you said, is the low level of our target. Reality is our target, so we don't pay necessarily high or low level. Clearly, we like to not drop significantly. Let's put this way below the 180. From that point of view, clearly, we're going to take management actions.
We have been taking management actions already. We took management action also in Q1. We are disposing July of some equity on the P and C side. We are going to look also at maybe putting some additional hedge on the credit spreads. And then clearly, there are other things that we can do in order to try to scale some additional solvency ratios on the back books that we are looking to that.
It might be helpful. And then we have always organic capital generation. So from that point of view, we feel comfortable about the level that we are. We have actions that we could put in place in order to sustain the solvency ratio. We need also anywhere to know that if there is a significant market dislocation, the solvency ratio can drop.
But at that point in time, we need to understand that's also the nature of the solvency ratio once after it drops. Usually, there is a recovery cashback up. So from that point of view, we shouldn't be overly scared by some volatility in the ratio. This clearly we are putting action in place in order to make the solvency ratio as resilient as we might be we came.
We will take our next question from James Shuck with Citi.
So some questions from me. So I'd like to get a feel for the volume outlook in P&C. I think normally you guide towards around 3% to 4% of GDP growth in a normal year. You'll think of this as probably a bit more biased towards SMEs than others. And obviously, SMEs is seeing a lot of pressure.
So just keen to understand how you see that evolving, not so much this year, which is going to be a difficult year to predict, but maybe next year? That's my first question. Secondly, I know it's a number you haven't normally given or liked to hear, but would you keen to understand what the central liquidity level is, please? And if you could comment on remittances year to date and the outlook full remittances next year given local levels of solvency, that's very helpful. My understanding is that local regulators are looking a little bit more closely at local liquidity over and above the Solvency II ratios.
So if you could just confirm whether that was indeed the case, that would be helpful. Thank you.
Yes. Maybe starting from the liquidity. Clearly, I don't have to give you the number, but clearly what we have been focusing here has been to secure as much liquidity as possible in the group. And from that point of view, we have been also, I would say, successful. So we have received the majority of the dividend from our subsidiary.
And this has been really one of the main focus. Once you when you get into a situation like the COVID-one, yes, it's at what regulators might be doing on locally. Disciplines on legislation by legislation. And again, as I said before, we've been very proactive in repatriating dividend, then we need to see clearly what the position of the local regulators is going to be next year. That's the reason why we have worked under the assumption that we need to get as much cash in Munich as possible soon because you never know what might be what might happen last year.
So from that point of view, in Italy, you say when you are like an age, the age has stored a lot of things to prepare for maybe tougher time. So from that point of view, we feel comfortable about the liquidity position. We have a group as we think clearly about 2021 and also 2022. On the other question, that was about the SME. Yes, moving forward, yes, we're going to see some pressure on revenue.
There is no on the P and C side, there is no doubt because premium is online to business, the function of the turnover. So from that point of view, we know that revenue in some lines of business become under pressure. And that's the reason why then we need to work very diligently also on other drivers. 1 is productivity. It's always a driver that we are activating.
We can activate even more. And then there is always the technical excellence. So there are things that we can do clearly to offset some headwinds that we are going to see for sure. So as of now, as we are thinking about 2020 1 and as we look at our underlying performance and we try to extrapolate what might happen, we are still committed to get to our 93% combined ratio next year and this despite potentially lower revenue. So for the time being, we are still working towards that goal.
Why the reluctance not to give the liquidity number, Julia? Because it's a strong differentiating factor for you. You've got a good crude structure. You've got massive management businesses, very fee based, boring fated. And I just need to understand why you wouldn't give that number when you're in Asia you wouldn't be like.
Yes.
That's something that's traditionally we've never been giving. So from that point of view, that tradition has been serving us well over many years, and I'm not going to be the one breaking that tradition.
We'll take our next question from William Hawkins with KBW.
Giulio, could you elaborate a little bit what you've been saying about the regulatory environment? Because you seem to me a new you've said a couple of times that it's not conducive to a buyback. And you said earlier that even conversations about dividend payments are happening. I mean, now it seems to me we have the AOPA panic in but actually, last thing is to buy companies such as you. And since then, we've seen at least 1 Dutch company restart its buyback.
And we've seen a number of other countries we've seen a number of petitions restart their dividend payments as well. So I'm just a little bit confused. You seem to decline that the regulatory environment is still a point of stress. And the facts that I'm seeing from the wider market seem to be pointing to the less stress and less regulatory pressure than there was, say, 3 months ago. So I wonder if you could just help me reconcile that, it seems to me, inconsistency.
And then it seems like you've had a €500,000,000 frequency benefit in the first half of this year. Could you kind of give us any kind of guide about how conservative you've been with regards to delinquency? I mean, have you just done it efficiently and so that's the number? Or have you held back a lot because you know what the second half is going to look like? I'm assuming you're being conservative, but I'm just trying to work out how conservative you're being.
Yes. Maybe starting from the regulatory side. Okay. No, we saw, as you said, the Dutch regulator going one way, but you saw in the same time, Italy, as you affirm, just a couple of days ago, local companies had to be very prudent with dividends. So the recommendation was not to pay dividend.
That is a recommendation. Now when we speak about Buffing, Buffing has a different view, but the point is more that if from Europe and from other regulators there is, let's put it this way, a strong recommendation, encouragement not to pay dividend, that's what they say, which is also understandable to certainly agree from the standpoint. This has some implication clearly for buybacks because buybacks are considered to be even a little bit more of an issue. So that's what I'm saying. So you see some the majority, we saw the regulators are clearly implication for somehow for a buyback because as I stated, buyback has seen if you're wrong, it doesn't matter different from a dividend payment.
So that's what we were saying.
Then please I'm sorry to come back on that.
The 2 major markets, the Netherlands
and the U. K, you've actually seen the resumption of dividends. So And
the French, we are not a major market. If you say the French is not a major market, I'm not so sure. Maybe Italy might have a different view. And Europe is clearly very relevant still in the conversation. So I will say that this is the majority of the regulators in the European countries are encouraging.
Certain direction, we had also the ESRB coming out with it. Then everybody is always looking at what is happening on the banking side. So I will say that when you look at the environment is definitely clearly more indicating that there is not necessarily an encouragement that's good is going to pay dividend. And when you have a discussion on dividend, that's what I'm saying. That's why Germany, yes, because Germany is a little bit of a different story.
There's a sort of influence on the decision making on the buyback. But I definitely tell you there is a look also the European position will change indeed. And when you see also some indication was we're going to think about dividends maybe after the summer break and now they are indicating our dividends until January 1. And obviously, January 1 doesn't mean January 1st because nobody is going to pay a dividend on January 1st, right? Everybody is going to say, let's see the numbers of the year.
So now that's the environment is definitely a little bit it's still not changed, in my opinion. With the exception, as you said, of the Dutch regulator, I would say the position is still the same. And I would even say in some cases, the confirmation about the recommendation from regulators not to pay a dividend in a few legislation. Also, the extension of the period to January, it tells you that overall, I will say, is the same situation, not slightly worse compared to April. On your question about the frequency, yes, the frequency that we have observed is a little bit higher than it does compared to what we have been reflecting our numbers.
So from that point of view, we have been a little bit on the conservative side, but we need to say there is also overall uncertainty about what might happen to the severity as we go into the second part of the year. There could be also the thinking what might happen also for next year. So you want to keep some powder dry. There might be also regulators coming back. So from that point of view, yes, we've been on the conservative side, but I believe being on the conservative side in this kind of environment is also the right approach.
And then we will see what will happen in the second part of 2020 and also as we go into 2021.
We'll take our next question from Michael Hay with Commerzbank.
Thank you very much. Good afternoon. Two questions, one on Life and Health and one on Motor. The operating profit in Life and Health has been very resilient. While the new business generation is down, I understand that the IFRS operating profit comes almost exclusively from the in force and not from the new business.
Under IFRS, tech accounting, not all costs are fully spread evenly over the lifetime of the policies. So the new business generates some upfront burden, more so, of course, in local debt but also under IFRS. So the lower new business may have led to a positive impact on your IFRS operating profit in the Q2. Is that so? And can you quantify the impact of that?
Second question on motor. As you just mentioned, you have seen reduced frequency in motor but also in other lines of business. These benefits will likely lead to some premium rebates and adjustments for 2020 but also lead to people moving to cheaper tariff levels in an environment where no trading activity takes place. This may lead to premiums, which are not risk at the club any longer. How do you look at this problem?
And what are your expectations for 2021?
Yes. So if we come in for the second question, yes, definitely, we can see that premium might come under pressure on the motor side. And that's also because there's some you have bonus malonsist, then you might have mileage dependent premium. And here, that's where we also had to consider what is the thing we want to potentially and this is a conversation which is different country per country to have some rate increases in order to consider for what might be higher severity next year. So that's the consideration that we have.
And also there's a little bit one of the reason why we tend to be also in the conservative in recognizing the full benefit of the frequency right now because we know that the future might be a little bit more challenging. So it's a little bit of being conservative, a little bit on the financial side that can help. But then on the other side, also we're going to take a clear look at the expectation for severity. As we move into 2021, we are clearly analyzing what the impact on price might be just because of the bonus models and managers. And then we're going to we are on the net and we need to go for some rate increases, then we're going to see how we can put that in a smart way into the system.
So that's clearly something which we are considering. And I would say, country by country, we might have a different answer. On the Life side, I'll just tell you, first of all, for the biggest book that we have, which is Germany, in reality, it doesn't really makes a difference from a deck point of view, whether we do more or less production. We even tell you that in the case of all the hands, Germany, on an IFRS basis, the production means a little bit less profit, but it's not really that material when you look at the totality of the book. In other countries, it might be that you have a little bit less of a little bit of an impact.
But usually, I will say that we have lower production, the other acquisition cost, they stay stable. So I wouldn't necessarily say that lower production is helping the profitability because in reality what you do you defer more the variable cost. But what they are the fixed cost in reality they don't get deferred. So you should rather get under IFRS accounting a slight negative impact due to lower production, not a positive impact. But we are speaking of very if you ask me, it's not significant.
So the impact one way or the other.
We'll take our next question from Michael Huttner with Berenberg.
I had two questions, additional questions. And thank you very much for this, Giulio. You mentioned many times that your combined ratio, once you adjusted for everything, is below 94%. And my question is how much, Wilho? And maybe you should think about the answer on the 6 month business.
It doesn't have to be so complicated.
And then the other way of looking at it, what I'm trying to do is
to find out the answer to how conservative you've seen. If I look at the solvency capital generation of 5% ratio,
when Genvali and I know you have looked at
the pit, but when they reported it, I said, yes, look, look at that number. It was so strong because we were more prudent on reserves, and reserves are best estimate under Solvency II. I can't I'm not sure I could see the same impact in your Solvency II. I'm trying to say the only impact I'm seeing, I'd like some indication, is that you have less reserve releases.
I can ask thinking about Generali. So from that point of view, it's I can't speak to them. I just the difference between us and Generali might be that we have the same reserve basis between Solvency II and IFRS where it might be that Generali doesn't have the same reserve basis. So that might be the difference. So we don't differentiate between IFRS and Solvency II estimate reserves.
I can speak to generics, I mean, to confirm with them how they do the solvency to versus the IFRS basis. On the cost combined ratio, I will say the number is let's put it as well, it's not 93.9%, otherwise I wouldn't tell you that the number is below 93%, 94%, obviously. But also on the other side is now 93.1, otherwise I would tell you the number 93. So from that point of view, I will say, let's say, it's below 90%, 94% by more than a few business points. And from that point of view also, we see definitely that there is Get to the 93, clearly, we need to see how this COVID is going to play out over time.
But from what we see, the underlying performance is okay.
And just
on the reinsurance, there was a question where you said that you might get some recoveries of a couple of €100,000,000 or maybe more. And but just to confirm, you haven't booked any of this. So if you do get a recovery, it would be a positive to the IFRS numbers?
We have booked some amount. So it's not that we didn't book anything. It's not a material amount. But if we have 0 recovery, we would have a little bit of a shortfall. And if we go for a few 100,000,000 of recovery, we would have definitely an uplift compared to the number that we book for the time being.
But this time, we didn't book we booked 0. So we booked an amount, but it's not really significant. Also the way we book it, in reality, what we do is we look at the gross impact that we might have across the different legislation. As I was saying before, we look at what could be different risk case and we look at what the recovery might be. And then we apply some sort of the rectification to all these numbers and then we derive results on that result in the booking.
As we did this kind of consideration, we also consider some out. So that we might have some we think we're going to have some recovery.
And now just ask a follow-up question.
I mean, if you Ashik asked a specific question on the fluency and you basically said you're actually quite comfortable. But I imagine that you're comfortable because what you know today versus what's in the slide deck, what is the solvency today?
It's obviously today.
Our solvency.
Yes. Our solvency today, but I don't check every single day. I was just looking at the end of the month. I would say, rates went down a little bit. Equity market as of July were up slightly.
Credit spreads were was a bit of a narrowing on the sovereign bonds, a little bit also on the corporate bonds. If you ask me, wouldn't be so much different from the level that we have announced. I will say you can tell the level that we are now and the different effects have been more or less pushing out. That was 1 week ago.
You've got some management actions in July?
Yes. You can yes. We had some management action on the P and C side, but this is this might be might do 1% of solvency ratio. So that's what the management ratio that we did in July might be doing.
Excellent. Thank you so much. Thank you for being the best for helping. Thank you.
All right. We have a couple of minutes left. So I would say we'll take one last question, if there's any.
We have no further questions at this time. I would like to turn the conference back to your host for any additional or closing remarks.
Thanks, Kristine. All right. Then yes, we say thanks to everybody for joining
the call. We say goodbye.
Wish you all a very nice remaining afternoon. Thank you.
Bye, guys. Stay safe.
That concludes today's presentation. Thank you for your participation. You may now disconnect.