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 two. 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 three important aspects of our results which I would like to highlight. Group business operating profits have reached a record $4.2 billion, up 6% year on year with each of our geographic and business segments showing positive progressions. This result underscores the strength of our diversified portfolio and the disciplined execution across all business lines. Second, core ROE climbs 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.
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. I start with operating profit for this time. There was an all-time high bump of $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 basis point 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 the middle market. 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 six months. The property market is showing a reduction of the high rates of the past years, but remains attractive and profitable. The liability market, however, despite the strong rate increases, is still not profitable enough, and we underwrite this 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. In motor, in particular, saw an 8% 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 $4.9 billion of gross written premiums at a highly profitable 86.5% excellent year combined ratio, excluding CAC. We believe our underwriting skills, data availability, strong customer engagement across a range of diversified business lines differentiate us in the space of this 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, which sustained last year's record bump 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 an underlying 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 substantial opportunity to accelerate growth of capital-light, high margin protection solutions addressing the prevailing protection gap 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. Finally, turning to the considerable improvement underway at Farmers, they delivered a stronger first half year ever with bump up 4% to $1.2 billion. The Farmers Exchanges report a combined ratio of 90.5% despite the exposure to the California wildfires. Most impressively, the Exchanges' return to policy growth increased for the first time in over a decade.
Strong underlying profitability combined with the surplus ratio in excess of 45% sees the Exchanges raise their future growth ambitions to a 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 bump. 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 just remind you of now. A compound annual growth rate over 9% in core EPS from a 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 the questions to a maximum of two so we give everyone a chance to ask a question. Thank you.
We will now begin the question-and-answer session. Anyone who wishes to ask a question or make a comment may press star one on the touch-tone telephone. You will hear a tone to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you may press star and queue. Participants are requested to use all your hands as well as asking a question. Kindly limit yourself to two questions only. Anyone who has a question or a comment may press star and one at this time. The first question comes from Andrew Sinclair from Bank of America. Please go ahead.
Good afternoon, everyone. First question for me, Farmers doing really well. Dines as advising today. I just really wondered how that affects your target for mixed profits, the 45 - 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? That's question one. The second question 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. Really, the increase was probably still quite a bit more than I expected. Just really wonder if you can help unpack that higher expense ratio for us and where that goes from here. Thank you very much.
Look, I mean, quick answer on expenses, you have two different phenomena. The AIG component impacts the retail expenses, but then benefits the loss ratio, right? You have two sides of it. Expenses would be redefined with that, but also the loss ratio is redefined. The travel 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. We've been hiring underwriters, we've been expanding our capabilities. Of course, we don't have yet the revenues and the profits from that. I can't tell you if the expense ratio in commercial will stay at this level or will go lower.
Chances are it will go lower, but I can't tell you by how much. These are the two main impacts that we have had on the expenses, and they're both not replaceable ones. On property & casualty, I mean, we never change targets and we never change what we say, even because you said that already. I am, as you could have heard from my comments at the beginning, quite confident on property & casualty continuing to grow and continuing to deliver profits. If anything, this six months raised my confidence.
Maybe to add on Farmers your question, 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. 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 Hutner from Vontobel. Please go ahead.
Thank you very much. I had two, one on German life and one on pricing. On German life, I think two years ago you felt the, or it was felt, I don't know how to, the back book sale of $40 billion. It's going to be a bigger, quite a big deal. Now being your partner has changed ownership, so their ownership is now more acceptable to the regulator. 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 tax benefit wasn't going to be massive. I think as interest rates normalize, we're saying that the solvency benefit wasn't going to be huge. I think there is another moving part, and I just wondered whether you could kind of explain. On pricing, I know you're so positive on non-life, Mario, which is fantastic.
For me, as a thought analyst, looking at the pricing, I'm kind of thinking, pricing is down from 4% to 3% overall, probably in commercial lines somewhere around 2%. I'm just wondering, yeah, it's great to be positive on the outlook, but the pricing doesn't kind of support that. I just wondered if you can give us kind of how we can square the circle here. I think you've kind of alluded to it in lots of ways, but I'm still a bit puzzled. Thank you.
Okay. Michael, I 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. First of all, we're moving our books. As you see, we're moving our books towards specialty, towards mid-markets. We're reducing the impacts of liability. What we did in the motor book, there was, for example, in commercial auto, a pretty decisive cancellation of policies and contracts, partly contrasted by high rate increases. We're moving the books, and we move the books to businesses which have a much better combined ratio. As proof of it, you see that our combined rate in commercial is improving. Of course, if you have a combined rate 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 rate in the 90s. Yes, the rates are slowing down, but understandably so if you've been for four years in the 90s. Property is still very interesting and profitable, even at this rate. The future will be decided by the catastrophes in the next month. 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 on liability because although the rates are quite high, the claims cost is high, and the combined ratio stays too high. 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 where we think that we remain as profitable as it is for the next visible time. Did I fully answer you on rate in commercial, Michael, or?
More than I hope. Thank you.
Okay, thank you.
Just to give you a data point, because this is a super important element in our release today, I think the view of you on prices is a bit simplistic. Just a data point, Michael, on our property book in the U.S., right? There are valuation adjustments on the underlying exposure that are still north of 7%. This is coming on top of what trades are doing, right? This is to allow for inflationary pressure for cost increases. 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. It's a combination of things that allow us to still print in property a combined ratio below 90, including facts like wildfires happening in January.
Rate is one thing, but you need to look at the aggregate, and the aggregate is a very strong margin that we are still able to generate.
Fantastic. Thank you.
On the German life book, as you said, the completion of the region gives certainty to the market. It was important for everyone now beyond the individual transaction to get certainty on the ability to execute backbook deals in continental Europe. Now there is that certainty in the market. We mentioned before that we continue to be focused on finding the right transaction and the right partner for the sale. We're actively working with the German team to prepare and get through all the necessary steps. There is interest in the market. 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 two or three 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. We're going through that exercise. We'll update you in due course, but we continue to be strategically focused on this.
Brilliant. Thank you.
The next question comes from Fahad Changazi from Kepler Cheuvreux. Please go ahead.
Hello. Thank you very much for taking my questions, and thank you for the additional disclosure on middle markets. I was just looking at Friday's, and given the, again, the rates 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 markets and specialty? A second question on India Motor. It's turned around very quickly. Could you comment upon your expectation of the turnaround and what has accelerated this from the November CMV where we're looking to get below 96% by 2027? Thank you.
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? I don't know that. Markets can change. I have no evidence the markets are ready for a change. This is also driving us to insist on going mid-markets, smaller mid-range of prices, and the specialty business. The parts overlap each other, right? It's that clear. This is not a niche set, because, partly mid-market adapts as a specialty. You cannot sum up the two numbers. Can I ask Claudia to take care of your first question?
On the combined ratio, yes. 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. They literally left no stone unturned. They've been acting on pricing in a very sophisticated fashion. It's been increasing new business, double digits 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. That's what's driving 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 easily too. It's a consistent action, a lot of it going through pricing. You know that retail is relatively quick to revise. It's something that can be done on an ongoing basis. The way the teams have been acting to segment the customer spaces and make sure that they could push through the right degree of rate in the right segment has been really strong. We are seeing that coming through the numbers.
If you go back three years and you look at the notes, we say three years ago that we expected in 2025 retail to be below 95%. To me, the anomaly was last year, not this year. This year is going exactly as we expected three years ago. Last year was the anomaly with Germany worsening instead of continuing the 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 it is not a surprise for us, this.
Thank you,
Welcome.
The next question comes from Andrew Baker from Goldman Sachs. Please go ahead.
Great. Thank you for taking my questions. First one, can you just remind me the premium now associated with the North American motor doors? Given, I guess, the turnaround here and sort of further rates coming through, where do you think that combined ratio can get to? 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? Thank you.
Once again, I take the second question and I pass the first one to Claudia. On mid-markets, yes, we knew that we had an issue on the program business, and we knew that we would act on the program business. We're committed to the target as we were before, and we're confident that we're going to get there. 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. We're confident that the results will be visible. Nothing really unexpected there.
Yeah. From what we're seeing in July, Andrew, on the middle market book, you know 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. The team expects to be able to grow double digits. I guess the important thing to keep in mind is that the work to tune part of the U.S. program book has been done between last year and the first six months of this year. You will not see this degree of GWP decrease in the second half, right? The pruning actions have been largely taken. Obviously, they will still work through the combined ratio, but in terms of cost premiums, the bulk of it is done. What we expect to see in the second half is a kick-off in the core middle market premiums, over and above what we've seen in H1.
On North American motor, it's a roughly $2 billion premium book, so it's sizable. You've seen in the best year-on-year improvement. Keep in mind that last year, the combined ratio was also, and it's what we are showing in the slides, also included some reverse banking, which we've been communicating about, right, to make sure that we are equipped for potential adverse experience. That obviously increased the combined to the 120s that you see in the slide. We eventually said this year, so far, actually, the analysis has been slightly positive, and we've been prudent in the way we have defined the expected loss rate in the book, given the past experience.
Great. Thank you.
We expect this book to remain around to this level of profitability by year-end.
The next question comes from Will Hardcastle from UBS. Please go ahead.
Oh, hi there. Thanks for letting me take the question. I guess there'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 I'm 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 peak growth that you're sort of implying in that? Thank you.
I suspect we need to come back to you with these numbers because I don't think we have it offhand. 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 the specialty products they're selling. It's a mixed growth that has been an acceleration on the specialty side of things, which is one of the reasons why the gross premiums are increasing more than the RMs, right? It takes more time for the specialty policies to run through. They are 12-month policies. It's growth in both. We come back on this next. It's, by the way, something as well that's been defined dynamically, right? It cannot be perfectly predicted. They're working on that.
Yeah, absolutely. Thank you very much. Thank you.
Welcome.
The next question comes from Vinit Malhotra from Mediobanca. Please go ahead.
Yes, good afternoon. Thank you very much. I have actually only one question left after all you questioned last. That's just a clarification on the expenses because if it, if 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, you see obviously the underlying loss ratio is doing a lot, but the expenses eating some of that because of commissions or investment. Is that something that you would have anticipated or you should have anticipated? Is that something you're quite comfortable with? I'm just curious to hear your thoughts on that because that's obviously been the focus in an otherwise very strong underlying loss ratio.
Look, the retail component of it could have been anticipated by all of you, and definitely it was anticipated by us because as I said, I mean, we bought a travel guard, which has roughly $350 million of expense basis, but then has a 20-something percent loss ratio. Overall, this is a very profitable business. It was well known. The commercial component was budgeted by us. You did not know that, but it's precisely what we budget for. We were fully aware of it. We were supportive. We think this is absolutely the right thing to do. I don't see anything worrying us. Sustainable expenses are under control and are coming down. Every other expense item is absolutely under control and will come down. For us, this is not new and it's not unexpected and it's not worrying us at all.
The commercial part of it is 60 basis points, which includes the investment in the market I was mentioning before. It's a much smaller piece of the overall increase in expenses. The majority of it is the travel guard, and with the India product inclusion in retail, which was partly set up and partly done by the change that Mario was referring to.
Yes, thank you very much. If I can get my second one in, the slide nine is very helpful on the specialty line. Thank you very much. I'm just curious, between these lines, there must be a lot of moving parts because obviously the KYCR on the left-hand of the chart is slightly smaller. Is there any commentary that you'd like to share on this right-hand slide, which line you're focusing more on, the construction, the view of the market financial line? Is there any commentary there that we could use? Thank you.
Construction is our backbone. We are leaders in construction and engineering. That remains a point of strength of Zurich Insurance Group in the market, and it continues to be a growth engine for us. Credit insurance also is something that we have been doing very well over the past years. 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 in many of the new energy sources. I think we're very competitive there. ENS had a kind of a setback this year because of rates. It was very interesting in the past two years. This year, we're not growing that aggressively because we see that the market is softening of rates and the profitability might not be at the same level of the past years.
We don't plan to grow it. The other lines are what they are. You know our view on fiber. It's a very special line of business. We do fiber for SMEs and some of mid-market, so we don't go above that. Financial lines, not much to say about that.
Okay. Thank you so much. Appreciate that. Thank you.
You're welcome.
The next question comes from [Cameron Austin] from J.P. Morgan. Please go ahead.
Hi. Austin, three questions for me. The first one is just on the life TSM, clearly kind of came in better than I think I'd hoped at least. I guess given the relatively large move, should we think about the amortization pattern being any different to how you'd kind of described it before? 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 mixture. Yes, there's the middle market, and thanks for the disclosure there. 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 through to kind of keep that combined ratio coming down a little bit more outside of rates and mixtures? Thank you.
Yeah. Usually, 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. You know, 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 two years ago bad results. Last year was better, but still not okay. We have reformed the crop portfolio this year very carefully, and we want to see if this produces the results. As I mentioned before, it's especially important for us to continue pruning liability portfolio. We're not pleased with the liability results or with the profitability. I heard that other companies are happy with that, and we're not. We will continue taking actions, either on rates or on canceling some accounts.
We're pretty pleased with the profitability of mid-market, broadly speaking, businesses, and even the property portfolio is generating very good returns at the moment.
On the life CSM question, Cameron, 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.
Got it. Thanks very much, both.
Thank you.
The next question comes from Dominic O'Mahony from BNP Paribas Exane . Please go ahead.
Hello both. Thanks for taking our questions. My first question is just on the financial result within P&C. I'm looking at slide 30, and 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 a fair trip as well. Could you just help me bridge from what looks like, you know, a book yield that should imply a sort of a 10% increase on top of a growing book back to the smaller increase in the investment income? What are the other moving parts? I suppose relatedly, I'm going to try and shoehorn this into the same question.
If you're going to grow the, if you fulfill your 25s, $200 million on fully of 2024, and it's a really sizable increase in the, if you, 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 consistent in saying the life profit will be, is effectively in line with last year at $2.2 billion. When you gave that guidance, the dollar was in a different place. I have been expecting that that's a bit of a tailwind to the life profit, even your $2.2 billion sort of adjusted for the effects. Thank you.
I don't think we're just for the effects. On the effects of the, I don't even know where the effects will be because there is volatility there, and I wouldn't predict the effects level by year-end. I wouldn't even try to do that. 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.
Keep in mind, John, that we had last year $150 million one-offs. The fact that we plan for the full year to be in the same range is actually a substantial increase. I'm not taking into account any one-offs. We didn't have any positive one-offs in H1 like last year. It's quite an ambitious target, I would say. On your first question on the NLI for P&C, there's one main driver for the increase that's not as high as expected, and that's hedge fund performance. A significant chunk of the hedge fund holdings was reported through P&C and is part of the NLI. While it's positive in terms of market and gains in H1 2025, it's not as high as last year. It's roughly $100 million, a bit less than $100 million year-on-year. That's the main explanation for the NLI gap, if you will.
Your second point, sorry, was on ET on the $200 million, right? On the full-year guidance, is that?
Yeah, 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 on page 13. If I'm understood correctly, the hedge fund gains are within the $36. I understand the point about that. I'm just a bit surprised the $1,276 didn't go up anymore.
Yeah. There's no particular reason, actually. There's some ethics that comes through as well. On some, I use dollar-denominated items that have been held in the Swiss balance sheet, but there's nothing more substantial than that.
Okay.
Yeah.
On the ET?
On the ET, the online 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 a bit higher than the first half. Yeah.
Super. Thank you so much.
Thank you.
The next question comes from James Stack from Citi. Please go ahead.
Hi there. Good afternoon. At the risk of focusing on only negative things, there's lots of positive things here as well. Mario, I just want to get your kind of insight into your commercial kind of large account 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, a little bit more abruptly. Are you seeing that in your book as well? If you're able to give us an indication of how much you would classify of your North American growth for premium, how much of that is large account, that would be helpful. Secondly, just the kind of 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.
There are a bunch of listed players that do specialty insurers and stock books of conglomerates as well. What are you thinking in terms of kind of Lloyd's platform, the need of platform, how much you're integrating MGOs into the specialty book? Feel free to keep it for you should the output then would be helpful. Thank you.
Right. A large corporate, I can give you a precise number of splits, 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 Insurance Group was mainly a large corporate buyer. The problem with that was, A, that the combined ratio was relatively higher because of the competitiveness of large corporates, but B, was the volatility. Because, of course, if you're serving a large corporate, you have a large corporate playing too. 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-markets and SMEs. We're seeing here, we're still growing. Where we are today in mid-markets and SMEs is the result of 10 years of investments, growth, and shifting of the portfolio, and we're continuing that.
I don't see changes. There are long-term structural reasons for us to grow somewhere else than in the large accounts category. There are also practical short-term reasons to do that. This remains a priority for us. 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. There are some businesses that don't come if you're not a Lloyd's. Do we badly need these businesses? I doubt it. We don't feel we are limited by that. That is something that we keep looking at. We're open without having made a decision. On the definition of specialty, I completely understand what you're saying. That's why we put in the page a breakdown of what are specialties for us. As I said, specialties mean many different things.
As 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 of specialties?
Yes, thank you very much.
Okay, you're welcome.
The next question comes from [Andrew Priem] from Autonomous. Please go ahead.
Good morning, everyone. A couple of questions from me. Firstly, on Farmers, given the transfer service ratio, which is well above your pay for 38 target, could you talk a bit about what kind of combined ratio the insurers would be happy to accept and whether they'd be happy to go above 100% in order to have greater volumes and to actualize some of that excess capital? Secondly, slide four, the cash remittances. I noticed your full year 2025 bar is more than a third of your way, $19 billion. Could you talk a bit about that and whether that is just additional cash remittances in full year 2025 or whether that's indicating that it's a run rate where you might beat the $19 billion over the three years?
Okay. The purpose of that is simply to tell everyone that we've been very safe and comfortable from the dividend of this year. We have the cash, and we have even more cash than we should have had according to the target for 2027. The dividend is pretty safe. That's the message. As you know, over the past three plans, we have always exceeded the cash remittances target. Whenever we announce targets, you know, we don't just plan to meet the targets, so we always have the ambition to exceed the targets. It is very early. This is the first semester, and we have a lot more flowers to define the targets. On combined risk and the Farmers Exchanges, look, I think it's not just the Farmers Exchanges. It's also us. I mean, we want to keep the Farmers 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 Farmers Exchanges except for the combined ratio, except for the technical profits. We don't mind them having excess surplus, if I can say so. We don't mind having the combined ratio in the 95 - 100 kind of range. I think probably we're more careful than them. Because remember, the Farmers Exchanges are not professional people, and they might not understand completely the volatility and the fluctuations that are possible in the markets. We will keep the combined ratio in a kind of range 95- 100. We will try to avoid the combined ratio going above 100.
Okay. Thanks.
You're welcome.
We now have a follow-up question from Farhad Changazi from Kepler Cheuvreux. Please go ahead.
Thank you very much. Just one follow-up on when you're talking about effects. If I look at the life book, the non-controlling interest increased. Could you just comment, is that in part related to effects? It's probably related to lockdown. I'm just wondering if that $234 is in part related to the effects in addition to the higher earnings. Thank you.
I don't think this is driven by effects. Let us come back to you on this one.
We're flattered by your questions. We will think back and come back to you with an answer. Can I add myself the question and give you the answer because I'm surprised it didn't come? We had a specific effect in life in lockdown because sales in retail were down because of the transition of Santander in their organizational model and incentives. This has been fixed, and it will be recuperated or contracted in the second half of the year. That is one of the reasons why the growth in protection is it was below what we expected. At the same time, it is also the case why we're very confident on the protection growth because we saw this already corrected by Santander. They were as disappointed as we were by their sales results in Brazil. 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.
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. Our financial resilience with an SST rate of 255%, coupled with high cash conversion, positions us strongly to execute in the best long-term interests 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 Call & Co, and thank you for participating in the conference. You may now disconnect your lines.