Ladies and gentlemen, welcome to the Zurich Insurance Group Q3 Results 2019 conference call. I am Shire, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Richard Burden, Head of Investor Relations and Rating Agency Management. Please go ahead.
Good morning, good afternoon, everybody, welcome to Zurich Insurance Group's third quarter 2019 call. On the call today is our Group CFO, George Quinn. Before we start with the Q&A, George will make a few introductory remarks. When we come to the Q&A, can I, as usual, ask you to keep your questions to a maximum of two. If we have time, we'll come back to you after if you have follow-up questions. George, let me pass over to you now.
Thanks, Richard, good morning or good afternoon to all of you, and thanks for joining this call on our Q3 results. Before we move to the Q&A, just a few initial remarks on the third quarter. Just as a reminder, the focus of the third quarter release is, as you've known from the past, typically on revenue trends. We've got some qualitative commentary around the performance of the business. We will, of course, provide the full detail at the full year. However, I can confirm that we remain fully on track to meet or exceed all the targets for this year. Over the first nine months, we've continued to progress the strategy of focusing on customers and developing our distribution, while at the same time simplifying operations. I'm pleased to say that this has been rewarded by solid development across our business.
If you'll allow me, I'll turn briefly to P&C, because I'm sure that many of the questions will relate to the current pricing and claims trends that both we and the industry, in general, are experiencing. P&C pricing trends have continued to accelerate, particularly in specialty and in North America, with rates comfortably ahead of loss cost trends. Outside of North America, commercial lines rates also show signs of improvement. In addition to pure rate, we're also increasingly seeing improvements in terms and conditions. We're also increasingly optimistic that the current trends will sustain themselves through 2020 and continue to broaden out to other geographies. The increases that you've seen from today's press release are also increasingly being seen within our P&C top line, and that will be supportive to earnings over the coming year as well as the growth and the rate turns into the P&L.
Turning to claims trends, which I know has received a lot of attention in recent weeks. We're obviously not immune from the general market trends and recognize many of the comments from our peers, particularly in the U.S. I would remind you that we took action beginning already four years ago, and those actions are focused to a large degree on the lines that have been in the headlines, namely commercial auto and general liability, where we're taking clear action in terms of loss picks and on volumes. As such, I feel that we are probably in a relatively better position to manage some of these trends than maybe the average in the industry. Just turning to recent weather trends, and following on from the relatively light weather and nat cat trends of the first half, trends have been more normal since the half year.
Based on our current expectations around crop and the impact of cat that we've seen in Q3, we would expect the combined ratio to be slightly higher than the midpoint of the 95, 96 combined ratio range that we talked about previously. Our life business continues to deliver on a strategy of focusing on capital light savings and protection business, with our Swiss and Irish businesses continuing to show particularly strong performance, particularly in corporate life and pension sales. We continue to believe that the strategy is the right one, especially in this low yield environment. It cannot insulate us completely. We'll work hard to compensate, but I expect that the life business will face some modest headwinds from interest rates.
Against that, P&C will not only benefit from a positive trend that's continuing longer than we'd initially anticipated, but also one that's still accelerating, and one, as I mentioned earlier, that we expect to see broaden into the European markets. Farmers continues to deliver steady performance and continues to execute on its customer-focused strategy, the surplus continues to build and is now at an all-time high. That business continues to perform very well. The Z-ECM ratio is 113% in the upper half of our target range. The reduction since the end of Q2 principally reflects the fall in yields over the course of the quarter. As you'd imagine, we continue to have substantial capital flexibility.
Mario, I, and the entire team look forward to seeing many, if not all of you at the Investor Day next week, where we'll give you further insights into how we're thinking about the future. If you don't mind, please focus your questions today on the quarter or the year to date. We'll now be happy to start the Q&A.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only hands to ask a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Nick Holmes, Societe Generale. Please go ahead.
Oh, hi there. Thanks very much. I have just one question, which is, what are your thoughts about making changes to the bond yield sensitivity in the Z-ECM ratio calculation? Because it's just clearly too conservative, isn't it, compared to peers?
Thank you, Nick. I wondered how long I'd have to wait for that question. Maybe for the benefit of everyone who maybe doesn't understand it quite as well as you and some of your colleagues. Obviously we apply an internal model, when we model the impact of interest rates. That model is entirely based on swap curves. There is no ultimate forward rate. I think that has the impact that, well, I think most observers can readily, easily recognize that in the real world, we probably have less sensitivity to interest rates than certainly our European peers. Our published sensitivities are higher, principally because of the absence of that ultimate forward rate. You've seen the impact of interest rates in the quarter, and that's principally driven by Germany. It is a very strict market view of things. Despite that, the capitalization is still strong.
We are going to take a look at it. I can't tell you today what we'll do. I think as you're probably also aware, the EIOPA is looking today at the Solvency II UFR construct. We did some rough back of the envelope work, and we estimate that if we apply the Solvency II type UFR to our model, it would increase the ZECM ratio by about 20 points. We need to take a careful look at this because, of course, these things are very complex, and we can have unintended consequences. Probably all I can say today is I'll update you further when we come back at the full year, but it is a topic that we're looking at to try and find a way to be more consistent with the peer group.
That's really interesting. Thank you. Are you saying that 113 would be 133 with a UFR?
We estimate roughly We obviously have a very sophisticated internal model. We've done a far more simplistic calculation. I'm not sure I'd necessarily claim that it would be precisely 133, but we estimate that the difference of the current Solvency II UFR applied to Z-ECM is of the order of 20 points versus where we are today.
Okay. Thank you. That is very clear. Thank you very much.
Next question comes from the line of Vinit Malhotra, Mediobanca. Please go ahead.
Well, yes, good afternoon. Thank you very much. One question on the top line reported today, and George, you just said that you expect pricing et cetera to improve outside U.S. as well. In the EU segment, we can see very strong growth as well. I think it was 5% one edge and 6% for nine months. In the past was linked to the Swiss business and you mentioned Italy, I think in the past. Could you just comment a bit about where this growth in the third quarter probably came in? My second question is just on the Swiss solvency Sorry, on the ZECM, the kind of volatility, if you like. I was advised that as of now, the ZECM is probably closer to 120. If I just look at the Euroswap curve simplistically, it's up around maybe 30 basis points.
You show a 10 point of sensitivity. Again, from 113 to 120, is there something else that has happened in quarter to date? Is it just the fact that we can't just simplistically look at Euro swap and apply to the sensitivity because of definition? Just any comment would be helpful. Thank you.
Yeah, I agree. Thanks, Vinit. On the growth topic, the Swiss business is the one that still stands out as driving growth. We see growth across Mainly driven by commercial. Commercial is the one that actually sees most of the rate in Europe. In fact, if you look at retail in Europe, we would see the impact of pricing on retail as being quite a bit lower than the far more positive environment we see around commercial. Swiss is the strongest, then the U.K. For example, both Italy and Spain also contribute over the course of the quarter. On ZECM, I think the challenge with ZECM, well, not the challenge with ZECM, the challenge with modeling interest rates is that the sensitivities tend to be parallel shift. If everything was parallel shift, they would be perfect guides.
The challenge for us, it goes back again a bit to the answer to Nick earlier. It's really at the long end in some markets that's had an impact on us. Because we have no UFR in the model, we're exposed to that entire movement. Whereas, for example, if the German curve flattened, if we'd had UFR, you probably wouldn't see the impact of that. My apologies, it's hard to use those simple sensitivities. It's very hard to give you a sense of how the model responds to steepening or flattening or twist. It's obviously a very complicated topic. Just to go back to what you said, we haven't formally estimated it, but given the interest rate moves we've seen, given other changes that we anticipate, today we would anticipate that we would be back likely very close to the top end of our target range.
Thank you very much.
Next question comes from the line of Andrew Ritchie, Autonomous. Please go ahead.
Oh, hi there. George, it is inevitable that we're going to touch on the U.S. casualty topic. You used the phrase at the beginning, "not immune." I just want to explore what you mean. I guess you mean you're observing those trends for severity and a bit of frequency. It's not requiring you to further increase loss picks or is it, and that's being offset by something else? Is it causing you to think about the seasoning of loss picks and maybe holding on to reserves for a bit longer because of the uncertainty of the environment? I'm just trying to reconcile the phraseology, not immune, versus it doesn't sound like it's causing you to change guidance. The only other phrase I picked up in your opening comments was you talked about headwinds from low rates in Life.
Are you referring to the sort of economic effect of low rates or on IFRS earnings? I'm curious to know what you're referring to. Just things like ZZR drag or something, or what were you intending to mean by that? Thanks.
Thank you. Let's start with liability. The not immune comment. If we had a full quarter's worth of disclosure, and we were talking about PYD, I'd be giving you a number for PYD that you would all instantly recognize, and then you would ask me to break it down. Within that, you would discover that there are several gross large positives. Maybe about third or fourth on the list would be an adverse number, and that would be what we've done in our general liability reserving in the quarter. I think, obviously, we look at the same market dynamics as everyone else. From as far as we can tell, excess GL is still the main issue in the U.S. It's broadened out across a larger group of lines, but we see it mainly in excess GL.
It seems to be more a severity issue than a frequency issue from our stats. Again, within the scope of our overall loss picks, our overall reserving, we're happy that we can manage that. In fact, maybe one comment that's slightly forward-looking. The thing that we had not yet done in Q3 was to complete our workers' comp reserve review. I think as we've talked about before, we benefited from the fact that we've seen pretty strong positive development around workers' comp, and that's certainly been a significant benefit for us in managing the market challenges that we see around GL. One other comment on commercial auto, because that was also a topic for some of the peers last week. We've seen almost no movement in commercial auto.
I think if you look at the 2016 and 2017 accident years, we have a very immaterial positive reserve development. I think if you look at the industry on paid-to-incurred and compare them to us, we compare very favorably. In fact, I think if you isolate, say, the top four carriers of which I would view us as one, again, I think we compare favorably within that group. I think the comment was just to recognize that there is something taking place. We benefit from it on the pricing dynamics. This line of business sees the most price action. If you look at the year to date rates on the GL side, probably entered double digits sometime end of Q1, beginning of Q2. By the very end of Q3, it's almost doubled again. There is a market pressure that's driving that.
I think we're happy that we can manage the challenges that this line currently causes to us. On the Life comment. The Life comment was intended to be not a very scientific or mathematical comment, but maybe one that was a bit more economic in terms of outlook rather than immediate IFRS impact. Really, just to reiterate, we have a book that is generally positioned well for a low interest rate environment. Positioned well doesn't mean that in every circumstance it will produce significant earnings growth. As I look forward, and if I compare it to the last three years where Life has been, I guess the positive surprise from an external perspective, while P&C has had to work hard to deliver mixed performance.
I suspect we'll see P&C pick up some of the significant benefits we talked about really from rate, whereas I expect Life to slow down a bit just given some of those economic headwinds.
Okay, thanks.
Next question comes from the line of James Shuck from Citi. Please go ahead.
Hi, good afternoon. Two questions from me, please. On Farmers, you had some issues around trying to sell life products through the Farmers networks. Q3 seems to have got a bit better versus H1. Be interested to see whether you've actually seen any tangible improvement there. Also on the P&C side, as Farmers only grew GWP at 1% at nine months, that's the same as H1. I'm still waiting for that to accelerate a little bit. I know you mentioned the eastern states improving, but the headline still isn't I would have expected the Uber deal to contribute towards that. I guess, how's your claims experience going with Uber in the light of one of Farmers' competitors withdrawing from that segment? That's the first question. Secondly, just around crop insurance, please. What was the crop insurance experience in Q3?
When you're guiding towards slightly above the midpoint of 95%, 96% for the year, what are you assuming for crop within that, please? Thank you.
That's the longest series of two questions I've ever had. First of all, on Farmers. I think the short summary here would be that there's a long way to go, I think, yet before we'll be happy with the progress that we see on the life side of Farmers. I know that Geoff and the team at Farmers New World Life are working hard there. There are some operational changes they've made to try and create focal points where they really have the expertise to do this well, both within Farmers New World Life and within the exchanges. We think the benefits are still yet to come, and we wouldn't necessarily yet start to celebrate what we've seen in Q3. There's room for very significant improvement.
On the growth topic for the exchanges, in this case, I think Uber actually works against them because, of course, this is a GWP story, we're talking about a comparison to a period that had, I guess, one of the first Uber contracts against one that doesn't. While I hesitate to say if you take something out and the comparison all looks fabulous, if you do look at the ex Uber picture, it's pretty consistent with what we've seen in the last couple of years. The growth rate would be higher if I take out the growth in the prior period driven by Uber. It's a slightly strange concept, but I think Uber works against them rather than helps them.
It's almost impossible for me to comment on the motivation for the withdrawal of the exit of this relationship that otherwise existed between Uber and another insurance company. All I can say, certainly based on the feedback that I've heard from Geoff and the team, this relationship runs well. We don't see it deviate significantly from the expectations. I know the team enjoy working with Uber, and they're hoping to be able to support them further in the future. On crop insurance, what am I assuming? Again, I'm not sure I've had the opportunity to speak to you guys as a group, just to make sure that everyone's got the same information. I was asked about crop back at the BAML conference by the investor side.
Basically what I said to them there is that prevented planting, as I guess you guys have heard already from some of the more important peers in the market, that is going to produce a cost to the business. Having had, what, literally three absolutely fabulous years in crop, we're going to pay a bit back this year. The estimate that I gave around the end of September was that we would expect to see, just to keep it simple, combined ratios for crop probably edging into the three digit area. I think then I was thinking maybe high double digits, low triple. I think today I would be in the low triple digit range. We're talking somewhere seven, eight points above our normal expectation. That assumption is purely prevented planting. There's nothing in there about the revenue outcomes.
We don't see any signs from the market that there's any cause for an expectation around the revenue outcomes that'd be different from the plan. We wouldn't know for sure until we get to a period that will run up to somewhere early December. Just given the late planting for a number of our farming clients, the season will probably run a bit longer than it normally does. It's prevented planting, and I'm assuming about seven or eight points on crop versus our normal expectation.
Great. Thank you, George.
Next question comes from the line of Farooq Hanif, Credit Suisse. Please go ahead.
Hi there. Thanks very much. Can you comment in year-to-date what's been happening in your shift towards the MidCorp segment in U.S. commercial that you highlighted and what progress you're making there? Secondly, the strong LATAM growth in P&C. To what extent is this inflationary versus real customer growth? Thank you.
Thanks, Farooq. The story on the mid-market part of the commercial business in the U.S., what progress have we made? We got some more expenses would be the main summary so far. Kathleen and her team are working hard to reshape our existing mid-market business, but I think more importantly, to create a footprint that will serve mid-market clients and the brokers in a way that mid-market segment expects to be served. To be honest, I don't expect that to be a significant generator of technical profit. In fact, not only this year, but also next year. We're more likely to see additional costs in the U.S. as we build the necessary footprint.
That's within the guidance we have given for the cost outcome for this year, and you'll need to come to next week's Investor Day to hear more about the cost picture that we assumed for the next three-year period. Strong LatAm. If you're looking at like-for-like, so that adjusts for the impact of transactions, but also for foreign exchange. Of course, as soon as you adjust for foreign exchange, you will pick up some inflation impact. We have a reasonably sizable business in Argentina, that's mainly retail auto focus. That's a business that is almost entirely, it's imported, so therefore it carries quite a bit of inflation risk. The products are structured in a way that they typically reprice very quickly. Deductibles typically float, with the result that when you get back to a dollarized answer pretty quickly.
It will tend to overstate the growth on a like-for-like basis. Inflation in Argentina is probably slightly flattering the growth rate that we're achieving in Argentina.
Just coming back on that, you're still quite happy that you're getting decent double-digit growth underlying?
Oh, yeah. A good indicator across the entire region, which is the joint venture. They're back well into double-digit growth again. I think we're back in the 20s. Even if I extract a reasonable number for the impact of inflation in some of the stronger inflation markets, the underlying is still strong positive growth.
Yeah. Thanks so much.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Jon Hocking, Morgan Stanley. Please go ahead.
Hi there. Afternoon, everybody. Got two questions, please. Given what you're saying about your sort of relative reserving position in the U.S. on both rates and T&C is moving in the right direction, are there any sort of lines of business where you had sort of reduced exposure that are just now attractive enough to sort of tilt back into those lines? That's the first question. Secondly on Farmers. Given where the surplus sits now, is there an opportunity for the Exchanges to accelerate into the expansion stage, or is capital really not what's holding that back? Thank you.
Thank you, Jon. On the reserving and the impact of things we've done in the past in terms of reduced exposure, could we reevaluate risk appetite? The answer is yes, but it probably goes in both directions, though. On the positive side, I think you guys are all aware that we have two very substantial quota shares in place in the U.S. One's around the casualty book and one's around property. The casualty one is intended to be strategic and therefore longer term, and therefore you shouldn't expect to see any significant change there. That's not true of the property position. That was always intended to be a bit more tactical. We have been looking at that quite closely.
Just given the trends that we're seeing in property, we may reduce the session to the quota share as we come up to renew at the beginning of next year. I don't think we'll eliminate it entirely while we just see how the market cycles. Certainly that would provide some reasonably modest incremental growth to the U.S. book. One additional comment to make on that, though, we're not intending to carry more cat risk. We will spend a bit more money at the same time making sure that we hold the retentions at the level that you guys have seen in the prior presentation. On the flip side, though, we're starting to limit, and this is a global comment rather than North America. We're looking to limit the business around credit and surety.
Based on the feedback that we get, growth is almost limitless around that topic, or the potential for growth is almost limitless. We've told the business earlier this year that at least as step one, we do not want to see capacity grow around that topic. That's principally driven by the fact that, while we don't see broad themes in credit and surety, you do see in individual markets, idiosyncratic topics. They range from things like Carillion in the U.K. a year ago to most recently Thomas Cook in Germany. You guys have seen the impact of that on us, where we'll have a combination of both a retention at a level that you're fairly familiar with and the additional cost that we'll incur in reinstating the reinsurance. I think probably the book will shift a bit into next year and the year after.
More likely it moves a bit more short tail. With the additional caveat that I think we've currently reached a tipping point for our appetite around credit, and in fact, that may even start to scale back as we move into the latter stages of the credit cycle. I've talked so long in answering your first point that I've forgotten your second point. What was the second question, Jon? Sorry.
Just on the Farmers surplus and whether that gives you the opportunity to expand faster.
The short answer is yes. I think the issue for the Farmers, it's not a capital issue that holds the Exchanges back here. You need the right people with the right skills and the right capabilities to do this in the right way. Of course, they don't grow on trees. That tends to be something that limits it probably more than many other factors.
Great. Thank you very much.
Next question comes from the line of Jonny Urwin, UBS. Please go ahead.
Hi there. Thanks. Thanks for taking my questions. Just to focus on the casualty stuff a bit more. I'm just trying to gauge, George, is that comment that you're not immune to these trends, is that incrementally more cautious versus 2Q? Secondly, I think you mentioned in the past that U.S. loss trend was running around 10 basis points higher than Europe. Are you seeing any deterioration on your GL book or is it just building in a bit more prudence? Thank you.
I think the real reason for the comment I made at the start was simply to reflect the fact that we recognize within our portfolio the general trends that I think we hear from others. They haven't had the same financial impact on us for a number of reasons, which range from some of the steps that we took some time ago to reposition some of these businesses. That could be loss picks, it could be the size of the business, it could be the reinsurance program that we have in place around casualty in the U.S. There's no doubt, and in fact, I think I mentioned it already last year when we had either Q3 or full year, that we already saw adverse on the U.S. GL book. We had the benefit that we had a very substantial positive reserve development around workers' comp.
That trend hasn't changed into this year. We've tried to make sure that we reflect our expectations for this year and the loss picks that we made earlier in the year. There's certainly more inflation across the entire market than we would have anticipated a year ago. I don't expect, though, that that's going to cause us a significant challenge in our results for 2019. We believe that we can manage that within the overall portfolio we have. I guess maybe slightly more cautious, but I'm not trying to signal that we think we have a problem here. Quite the contrary, I think we've got the ability to manage this. On loss cost trends, if you look at the U.S., the U.S. is probably up by maybe 20, 30 basis points over the figures I gave back in the Q2 call.
Europe tends to be a bit more stable around this topic. I wouldn't have expected the picture to have changed markedly other than we see a bit more loss cost inflation in the U.S.
Thanks, George.
Next question comes from the line of William Hawkins, KBW. Please go ahead.
Hi there. Thank you very much. First of all, George, is there any chance you could give us an update on where you think your SST ratio has moved to by the middle of the year or maybe the end of September? Some kind of update to that would be helpful. Secondly, I think you've alluded to this in passing, but just to be explicit. You made the comment about your combined ratio. Given that you said that at the first half you expect your investment income to be stable for the full year versus prior year, are you sticking with that statement? Would you like to be a little bit more cautious on the outlook for P&C investment income given how yields have fallen? I suppose if you can just think about next year as well in the answer to that'd be helpful.
Thank you.
Yeah, good. Okay. Apologies on the SST topic. I cannot give you an update today on that. SST has a different methodology from ZECM. SST does permit a bit more conservative UFR methodology than the Solvency II. I don't have a number for you, but directionally, if you applied that SST permitted UFR, you would not expect to see the same size of movement that you've seen in ZECM. On the investment income topic, with the caveat that I gave earlier that you need to adjust for the hedge fund topic and the investment income, so for the yield component, no change to our view that we'll expect to see something broadly similar. Of course, if interest rates remained where they are, where they were, if that makes sense, where they are. They're still lower than they were certainly in the first half of the year.
That would have an impact on investment income expectations for next year and potentially beyond. I think the only thing to bear in mind there is that the duration of the liability and therefore the assets is around five years. It's a reasonably slow burn. Just given where we are, if interest rates remain where they are, more likely that's a bit of a headwind rather than a tailwind for us.
I know it's a really complicated equation in practice, but are you guys comfortable that in general you can pass on the strain of low yields to the customer by adjusting the combined ratio down, even at this very low level for yields?
Whether it's because of interest rates, whether it's because of the GL topic, whether it's because of nat cat accumulations over the last few years, when you've got a rate environment that is way ahead of loss cost trends, and in fact, that gap has opened up again in Q3. I think that there's a piece in there that I guess you could attribute to the impact of yields. I think the overall rate environment is doing more than enough to help us with the yield issue currently.
That's great. Thank you.
Next question comes from the line of Peter Eliot, Kepler Cheuvreux. Please go ahead.
Thank you very much. George, I just wanted to follow up quickly on your comment on Thomas Cook, because apologies if I'm behind the curve here, but last time we spoke, I thought that the message was we shouldn't really expect anything material. You seem to be saying something a little bit different. I was just wondering if you could update me anyway on your thinking there and any quantification you could give would be great. The second thing was, just since we're on SST and modeling, I wanted to take the opportunity to ask you. Your interest rate sensitivity in your SST is relatively high, and that compares to peers who show very little sensitivity. My understanding was that the new SST framework was very insensitive to interest rates.
I was just wondering if you could explain that to me or why you have the larger sensitivity. Thanks.
Yeah. Thanks, Peter. On Thomas Cook, I think last time we met, I talked about the loss. I gave a very broad indication where the loss would fall. The thing that I left out of that conversation was the impact of reinstatement premium. I don't expect the combination of these two things to be particularly significant in the group's results for the year. Certainly if you look at, well, you can, but I can't. If you look at our Q3 results, there's a delta in there that's driven by crop and Thomas Cook. For example, if you think of our normal retentions, today I would expect Thomas Cook, the net claim payments plus the reinstatement premium to be around twice our normal retention levels. On SST modeling, the answer is relatively simple and straightforward.
Currently, our modeling of interest rates doesn't take full advantage of the UFR that SST permits. That's why you see this much more sensitive picture in our SST than you might see elsewhere. That's obviously a topic that as we look at the need to be a bit more consistent, that we're also going to consider as we approach the year end.
Yeah. If I can just follow up that very quickly. Obviously, the ZECM is used for your internal view and management view, and my interpretation was that the SST, really its only purpose is regulatory. I guess I'm just wondering why there should be any need to diverge from the regulatory framework.
Yeah.
Make sense they align.
Just to be clear, we don't deviate from the regulatory framework because that wouldn't be permitted.
I'm sorry.
We agree with FINMA and the approach that we take. One of the challenges with these complex models is that the overhead of running these things is pretty substantial. To the extent that we can have consistency between them, it makes life a bit easier. We've taken a relatively pragmatic approach to some of these topics in the past in agreement with the regulator. I guess that did not anticipate the size of the move that we saw back in Q3. I agree with you. The SST serves an important purpose for the regulator. We will have another look to see if there was something we should do, I guess just recognizing that, of course, we don't have freedom in SST.
That's something that if we do wish to change things, FINMA will expect to review and take their decision on whether they're comfortable with any change we may or may not propose in future.
That's great.
Okay. As we have no more questions on the call, I'd just like to thank everybody for dialing in today. If you have any follow-ups, please feel free to contact the IR team. Otherwise, we look forward to seeing you all in London next week. Thank you.
Ladies and gentlemen, this concludes today's Q&A session. Thank you for participating, and wish you a pleasant rest of the day.