The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Kamran Hossain - RBC Capital Markets, Research Division - Analyst
: My 2 questions, the first one is on P&C Re. The expense ratio there looks to have reduced about 3 points year-on-year. How much of this is permanent?
Or is this kind of less COVID spend? And I guess, looking forward, should greater operational leverage from growing at the 1/1 renewals and further
growth to come in later years improve this further?
And the second question is on Life Re. Given how U.S. mortality has kind of increased pretty substantially, even since your December guidance,
are you still comfortable with the EUR 400 million Life target?
Christoph Jurecka - Mnnchener Rnckversicherungs-Gesellschaft Aktiengesellschaft in Mnnchen - CFO & Member Management Board
Yes. Kamran, Christoph here. I'm going to take both of your questions. Expense ratio development. There are some one-off elements in there as
we, for example, released some provisions also in Q4. But fundamentally, a major driver is growth here. And as we have been growing our book
quite significantly and continue to do so, I think there is continued pressure also on the expense ratio going forward despite the fact that some of
the one-offs will not repeat themselves again this year.
On the Life Re side, U.S. mortality. Indeed, the winter spike was probably a little bit higher in the first couple of weeks of this year than what we
had in our mind when we came up with the estimate in December. However -- I mean this is a long year ahead of us. And therefore, I think it will
be far too early to say that our guidance would no longer be the right one. Maybe the risk is a little bit higher that we will not achieve the target,
but the guidance is what it is and it is unchanged.
Question: William Fraser Hardcastle - UBS Investment Bank, Research Division - Analyst
: A couple of questions on SCR, if that's okay. So we've got the uplift for the P&C exposure goes, presumably, that's incorporating the successful 1
January renewal. Is it already including similar exposure growth assumptions for later renewals? You mentioned they're more nat cat heavy, but
you're expecting higher prices. So just sort of an idea as to what's incorporated within that uplift this time?
And then the second component is, what do we need to see in the market [futures? Do you see] additional risk charges on the volatility side? I
mean is there any way you can give us an indication of how much that SCR uplift was perhaps year-on-year for these higher volatility charges
specifically?
Christoph Jurecka - Mnnchener Rnckversicherungs-Gesellschaft Aktiengesellschaft in Mnnchen - CFO & Member Management Board
Yes. The first question is simpler to answer. So I'll start with that one. We include in the SCR calculation business which is already bound. And this
is true only for the 1/1 (inaudible) signed. As this is not the case for 1/4 and 1/7, it's not included in the calculation.
The additional risk charges, that's hard to say. And honestly, I'm not even sure if we did internally a separate calculation. So not changing anything
in our book, just changing the risk charges and run the full stochastic calculation, I don't think we did do that.
What we can say is that it made quite some role already in Q2. I'm not aware that it did a lot -- it did intensify a lot over the remainder of the year.
It was mostly an effect already visible in Q2. But the order of mechanism, sorry, I do not have any answer to that.
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