Swiss Re (SSREF) Q3 2016 Results - Earnings Call Transcript

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About: Swiss Re Ltd (SSREF)
by: SA Transcripts

Swiss Re LTD (OTCPK:SSREF) Q3 2016 Earnings Conference Call November 3, 2016 9:00 AM ET

Executives

Philippe Brahin - Head of Investor Relations

David Cole - Group Chief Financial Officer

Matt Weber - Group Chief Underwriting Officer

Guido Fuerer - Group Chief Investment Officer

Analysts

Thomas Seidl - Bernstein

Xinmei Wang - Morgan Stanley

Kamran Hossain - RBC Capital Markets

Vinit Malhotra - Mediobanca

Olivia Brindle - Bank of America Merrill Lynch

Guilhem Horvath - Exane BNP Paribas

Frank Kopfinger - Deutsche Bank

In-Yong Hwang - Goldman Sachs

Stefan Schurmann - Bank Vontobel

Vikram Gandhi - Societe Generale

Michael Hyde - Commerzbank

Operator

Good morning or good afternoon. Welcome to Swiss Re's Third Quarter 2016 Results Conference Call. Please note that today's conference call is being recorded. At this time, I would like to turn the conference over to David Cole, Group CFO. Please go ahead.

David Cole

Good afternoon everyone and welcome to our Q3 2016 Results Conference Call. I am here today with Matt Weber, our Group Chief Underwriting Officer and Guido Fuerer, our Group Chief Investment Officer, along Philippe Brahin, our Head of Investor Relations.

Let me just start with a brief overview of the results that we published this morning. As you are seeing Q3 was a strong quarter was Swiss Re with positive contributions from all of our business units. Group net income was $1.2 billion for the quarter, bringing us to a total net income for the first nine months of $3 billion.

Both the Q3 ROE, as well as the ROE for the first nine months demonstrate that we maintained the quality of our underwriting and investment portfolios in a challenging market.

During Q3, Reinsurance delivered $896 million of net income, underpinned by the solid underwriting performance of our P&C and Life & Health businesses. Corporate Solutions reported an ROE of 16.5% for the quarter, and Life Capital delivered strong gross cash generation $248 million. The Group ROI for the quarter was a strong 3.5%.

We also announced this morning that we'll launch the share buyback program as authorized by the 2016 Shareholders Meeting. We will launch it tomorrow the 4th of November as we've already received all the necessary approvals to allow us to do so.

Finally, we underlined our presentation to continue the external recognition of our engagement and sustainability. Swiss Re was again named industry leader in the Dow Jones Sustainability indices as well as other indices.

With that I will hand over to our Head of Investor Relations, Philippe Brahin, who will introduce the Q&A.

Philippe Brahin

Many thanks, David, and good day to all of you also from my side. So as usual, before we start the Q&A, I would like to remind you to please restrict yourself to two questions and register again for follow-up questions. So with that, operator, could we please have the first question?

Question-and-Answer Session

Operator

[Operator Instructions] The first question comes from Thomas Seidl, Bernstein. Please go ahead.

Thomas Seidl

Yes, thank you. Good afternoon. The first question is, actually on your targets, David, you just mentioned the ROE target is 700 bps above risk free roughly 8.5% and 10% economic network growth. Now at the nine months, you have 11.6%. If you normalize, just the P&C Re segment, so you overrun to the tune of $800 million and then realize gains, you know the highest since 2011, a few 100 million of over earnings there, I would say.

So, on an underlying basis, would you say you are pretty close to the 8.5% ROE level right now? And if so, what makes you confident that with the continued price pressure, you can meet this target over next one, two years?

That's my first question and the second then, regarding the two P&C segments, in both segments, the underlying loss ratio increased significantly. I think in the P&C Re is up 5, 6 percentage points and in the CorSo segment, 8 percentage point roughly speaking. So what were the drivers? And again, what makes you confident that you come back to the previous levels here?

David Cole

Alright, thank you, Thomas. I'll pick up the first question, I'll ask Matt to respond to your second. So indeed, you have seen our numbers through the first nine months. Our ROE target is US senior risk rate was 700 basis points. Of course those targets are through the cycle targets and not targets that we expect to meet every business segment, every quarter.

But they are through the cycle targets. So I think it’s just anyway, it's fair to that starting off from 2016, we are certainly on track. You do various types of normalizations, which I can understand that each of you have your own ways to do it.

But actually one of the benefits of having these through the cycle targets, because a lot of that been down adjusting I think, falls away once you look over a little bit of a longer period time, which we believe is absolutely the best way to do it. In terms of your question about, are we confident about the next one or two years? I would say that we are confident in the context of well-positioned.

I think we still see good opportunities to provide meaningful value to our clients and therefore also extract meaningful value for our shareholders. It's a tough market. These are challenging targets. Some would say from time-to-time ambitious given market circumstances. I do think we benefit from a very strong market position. We benefit from a diversified business mix.

And so, yes, they remain our targets and I hope to be reporting to you on those of course over the next several quarters, and the next several years and we'll see how we get along.

So with that, let me turn over to Matt for the questions regarding the P&C businesses.

Matt Weber

Okay, good afternoon. I wish I could give a very short answer. Unfortunately, it's a little bit longer than just one bullet point. So generally across both business units, we have seen of course market softening relative to the year before and as a result of this market softening, the loss ratios have increased a little bit in all lines of businesses.

In addition to that, we reduced peak Nat Cat given that on the EVM, the economic profitability for a portion of our book was just not given any more had we renewed it as it was up for renewal. So we have to reduce. So we decided to reduce some peaks Nat Cat exposure which on average across our book further increased our loss ratios.

Then on the Reinsurance side, we encountered this year an unusually high amount of agricultural losses, most of it is coming from France, a little bit also coming from China. And I would say, these three reasons are the key reasons why our underlying loss ratio corrected for prior year development or adjusted for prior year development and adjusted for Nat Cat were higher than a year before. Please note that when we adjust for Nat Cat, we do not consider agricultural losses as Nat Cat losses. So an increase or a decrease from that time will come after the adjustment.

Thomas Seidl

Okay, thank you Matt

David Cole

Can we go to the next questioner please?

Operator

The next question is from Xinmei Wang, Morgan Stanley. Please go ahead.

Xinmei Wang

Hi, good afternoon. So, my first question is just to follow-up on the previous one. Could you talk about how you think about the full year guidance for both the segments, please? I think you still kept the 99% for P&C Re. So that implies a sub 100 underlying in 4Q. If you could explain the reasoning behind that and also just similarly for CorSo as well, I think you're saying that that's not going to be met anymore.

So what kind of number should we be thinking about that? And then my second question is on the reserve leases. I understand they have been pretty positive across the board, also some charges in Asia. What is the driver of these releases given your best estimate reserving? Is it again a factor of low inflation relative to expectations or is it something else? Thank you.

David Cole

Thank you. Matt, Right over to you.

Matt Weber

Okay. Could start with the first question related to the expected loss ratio or the expected combined ratio, it's not guided, it's an expectation. We mentioned at the beginning of the year and that's every year, the year before we made the decision to not update this expectation as we go through the quarters.

On the Reinsurance side on a year-to-date basis, we stand at the combined ratio of 100.4%, so slightly above the 100% little bit, that’s higher than we thought it would be. Looking at everything, we think there is a decent chance that at year-end, we end up with a combined ratio below 100%. Of course, there is no certainty that this is going to happen, but a decent chance.

On the Corporate Solutions side, we stand on a year-to-date basis at 103.7%. The reasons are the following: our expense ratio is higher given the fact that we didn't increase our premium writings as much as we planned to do. This in response to an accelerated market softening a little bit higher than what we thought it would happen.

Secondly, also on the Corporate Solutions side, we reduced property business that is Nat Cat exposed again, given the fact that it did not meet our economic hurdles under EVM. We also reduced a little bit on the surety side and on the trade credit side. And this combines with we are experiencing, a tad, not a huge amount, but a tad more market softening than we thought what would happen, make us believe that it will be highly unlikely for us to meet the 101% which we expected at the beginning of the year.

With respect to the reserve releases, on a global basis, given that we do not have a single large bucket where we experience a huge amount of reserve releases; it spreads pretty much all over the world, most of it in the Americas and in Europe, in Asia.

Some of the releases we have seen were offset by an increase of the New Zealand earthquake losses from 2010 and 2011. But given the fact that we are seeing these releases pretty much across the whole globe and across all main line of business and even if we drill down in most segments, we conclude that it’s just a result of the inflation which continues to be very low.

David Cole

Thank you, Matt. Can we go to the next question please?

Operator

The next question is from Kamran Hossain from RBC. Please go ahead.

Kamran Hossain

Hi, afternoon everyone. I've got two questions. The first one is just about, there were some reports in the press about potentially yourselves and a large US-based reinsurer taking on some legacy deals. Can you talk a little bit about if you are thinking about deals like this and sort of what the rationale of taking them on would be?

So that's question one. And the second question is just about inflation and then, I guess in the UK, it's something that we are worrying a little bit about here. It will be really helpful if Matt can give some comments just about how well you are positioned, especially given your UK exposure to any kind of sudden spike in inflation, that’s - that would be really helpful. Thank you.

David Cole

Okay, thank you very much. We'll let me first just respond to the rumors that you were referring to. As you know, we can't allow ourselves to get into a position to respond to various things that maybe reported from time-to-time regarding various matters. So, we'll stick to that policy on this one as well and we won't be responding to market rumors. So I hope you’ll appreciate that, Kamran. I’ll turn it over to Matt for the second.

Matt Weber

Look on the inflation side, sometimes people ask me what keeps you up at night. To be perfectly honest, I sleep very well. But if I didn't sleep very well, it probably would be because, I was thinking about inflation and the possibility that the ever-decreasing inflation of the past actually puts turnaround.

So, we are observing this very, very carefully and of course we are not just observing it, we are taking it into account in the pricing and in the costing and in the reserving, as well, on the costing side, we are taking it account via the loss severity, trend factors and we actually entertain a significant amount of R&D trying to forecast the loss severities, which then our underwriters are using before a piece of business is bound.

Kamran Hossain

So what are you saying Matt, if I was a UK mortgage insurer, I might be looking at paying a little bit more for my reinsurance next year, would that be a sensible assumption or not?

Matt Weber

Not actually. That would be a forward-looking statement, which I will be hesitant to make at this point. But trying to taking to account inflation is a core element of underwriting and costing, which is a core competency of every reinsurance and insurance company, but especially also of Swiss Re. So, we are taking this very carefully.

Kamran Hossain

Okay, thanks very much. I appreciate your answer.

Matt Weber

Next question please.

Operator

The next question from Andrew Ritchie from Autonomous. Please go ahead.

Andrew Ritchie

Hello, hi there. I was intrigued the comment you made that part of the reason the underlying combined ratio was higher in the quarter. Was - you looked at your motor books in the US and the UK.

Maybe if you could give us a bit more color on what is it you've identified there? Is this the kind of severity issues we are seeing particularly in the US personal lines, primary writers or what is it? And presumably, the implication from the comment in the slide, is this is a cat job on your calendar year or your current year loss picks on the auto books. So just clarify in detail that would be useful.

Second question, on the life business, we've seen some primary life writers in Australia do some catch-up on visibility income and lump-sum payments reserving. How do you feel currently about your reserve situation in the Australian life market given that it looks like the claims environment is still pretty tough? Thanks.

David Cole

Thank you, Andrew. I think I'll let to Matt. Yes.

Matt Weber

Okay. So, motor UK and US, mostly US actually, that is a segment where today we know that -- nine months ago when we wrote this business, we were a little bit too optimistic in our assumptions. Please know that whichever we trying to look forward and make a peak with respect to loss trends, it's an estimate and sometimes you are too pessimistic, sometimes you are too optimistic. So here we were too optimistic with respect to both the severity and the frequency.

In our case, it might not true for everybody else, but in our case it is driven by commercial motor and within commercial motor, it's driven by trucking business. In our opinion, the two most important reasons are after - the first reason, after the financial crisis, a number of drivers were let go and a few years later, when the economy picked slightly up, drivers were rehired by companies including also in the construction sector.

But not the drivers that initially were let go were rehired younger, more inexperienced drivers were rehired. And that has led to an increase in loss frequency, which in addition to that is intensified by an increasing amount of distracted driving. 4G is fantastic, but it does not help with the accident frequency.

In addition to that, over time we are seeing a trend towards heavier trucks with heavier loads, which also means if something happens, the impact severity is likely high.

Andrew Ritchie

And this was a catch-up for your - the whole year's loss specs, and that we saw in the quarter?

Matt Weber

You see, what we did is an adjustment to the high priority loss ratio, which matters for the developments to come.

Andrew Ritchie

Okay and just could you share that you think – you are doing in US commercial auto or is it an excess loss, or?

Matt Weber

We write both proportional business and non-proportional business and if you get the inflation wrong, the impact is bigger on the non-proportional side because the excess inflation is bigger than the underlying inflation.

Andrew Ritchie

Okay, thanks Matt.

David Cole

Thanks, Andrew. The second question regarding Australia, I guess I'll take. I guess a number of you will remember several years ago, I think it was 2013, we experienced some issues with parts of our Australian business, which led us to really do a deep dive review and make sure that we had the right structures in place and measures in place, communication with clients and what not allow us to really stay on top of that business.

And in the meantime, we've seen that that business has responded in a good way, positive way and we feel very comfortable with it. The issues that you were just referring to, I am not aware of, I either not see the issues that have – it hasn’t in a way that it would be brought to my attention, Andrew. So a little bit of an answer, I am not aware of anything that would allow me to give you an answer that indicates that we picked up those types of trends that you are referring to.

Andrew Ritchie

Okay, thanks.

Operator

The next question is from Vinit Malhotra from Mediobanca. Please go ahead.

Vinit Malhotra

Yes, good afternoon. So one question is on this whole concept of the tailor-made, which has been driving growth for several - probably years now and thanks to the Sigma team at Swiss Re, where we got a chance to see a bit more about what are the tailor-made transactions. Could you comment a little bit about where exactly in the three or four types of transactions of mixed risks or capital loss strategy?

Could you comment where this growth typically comes from? Is it all spread out or and then I would also say that definition is quite broad based. Is it - has it always been like this, so it’s just a bit of comment on where the tailor-made comes from?

And second question is, there is this speaker note comment on an upcoming FINMA model change that is likely to boost solvency. Could you give us a sense of magnitude here please? And how it would or how it could potentially influence any future capital measures? Thank you.

David Cole

Okay, thank you. I'll take a stab at both and then maybe ask Matt if he wants to add anything to the question regarding the tailor-made or bespoke transactions. So first, thanks for the feedback on Sigma. We'll pass it back to our team. The whole intent was I think to help the market, including our clients understand some of the opportunities available to them. You're absolutely correct.

We started talking about tailor-made large structures, bespoke transactions already going back I think to perhaps as early as 2011, 2012 on a consistent basis. That's because we as we recognized that there was a possibility for us to in essence provide more value to our clients by bringing together our research base knowledge, our global reach and tying that in with our very intense client relationships at various levels with our clients.

Now you said something on the lines of it is a little bit of a vague description, tailor-made. That's correct. Tailor, large, bespoke, they basically reflect transactions that on one hand have a certain size and substance and number two, are something different if you will in terms of the business mix, the nature of the relationship that we established with the client.

It goes a little bit beyond the typical syndicated type of risk that you may see coming through the panels or what we refer to them as flow business. It's actually around the globe. There is not an individual region. It’s also various lines of business. It’s both Life and Health as well as P&C.

These things are not coming from one individual client or one individual region. We have, as you know very extensive contact with a very well-diversified group of clients around the world. And we are in constant engagement with them looking to help them not only solve issues they may have around volatility, their P&L or capital issues that they'd like to address, but also helping them grow their business.

And these transactions are excellent tool that we apply to actually demonstrate our ability to differentiate. It's not just capacity that we are providing typically, SLOB additional value-add products. Let me leave it at that. I am going to pick up the second and then I'll give off to Matt, so he can actually supplement.

So the FINMA model, yes, we wanted to flag that, it was out in the marketplace. FINMA has indicated they are contemplating some adjustments to the way in which SST ratio is calculated. That in essence is a mechanical adjustment, but the adjustment will make the ratio outcomes a little bit more comparable with the way the Solvency 2 is calculated.

What we've said is that, we do look at this as somewhat of a mechanical type of an adjustment. The likelihood that the rules are not finalized, but the likelihood based upon what we understand their intent is, is that will optically increase the ratio. But what we want to make sure everyone understands is that in and of itself, that doesn't change the nature of our excess capital versus the 100% requirement.

We may come back to that at our Investor Day in December, a little bit depending on how FINMA gets along in terms of finalizing the rules and that we understand they really are going to take place. But I think the key message that we wanted to bring right now is that this change may well take place. We see it as somewhat more of a mechanical change than anything else. The likelihood is the reported ratio will go up.

Vinit Malhotra

And if I can just follow-up quickly, the target range could also change presumably?

David Cole

Well, let's wait and see what FINMA actually finalizes and once we understand that then we'll talk about that. We will update you all on our capital position, our SST ratio in the first part of next year as we always do and I would certainly anticipate that by that time, the rule will be finalized and we'll be able to talk about our risk tolerance ranging. Matt, anything you want to add on the tailored transactions, bespoke?

Matt Weber

Yes. First actually I must say, I was pleased to see that I am not the only one gives long answers sometimes, someone’s questions. You said pretty much everything, I would have said. Let me just add two additional thoughts. Typically, bespoke transactions are more a thing of mature markets than high growth markets.

So at least historically, this has been the case and secondly, it's very hard given that they are bespoke and tailored, it's very hard to classify them, because the needs they try to address can be very diverse ranging from capital relief to smoothing out earnings to accelerate earnings. So really different needs.

Vinit Malhotra

Can I just quickly check, if between complexity of risk and capital support if you had to distinguish, would you say most of the growth is the capital support side or most of growth is complexity side or both could be an answer, but maybe?

Matt Weber

Look, it changes over time. It's just - if we wrote and you know, we did this in the past. If we wrote a big motor quota share somewhere in Asia, that would not be a yield, that requires a lot of capital. It actually would require very little capital under EVM. But as soon as you make signal little bit Nat Cat, the capital consumption increases very quickly. So, there is no uniformity and therefore it's very hard to give you answer to that.

Vinit Malhotra

All right. So thank you.

Philippe Brahin

I just politely request people to restrict themselves to two questions. So you can get back in the line if you want to. We want to make sure we give everyone a chance to ask their questions. So, thank you for that, Vinit. May we go to the next question please?

Operator

Our next question is from Olivia Brindle, Merrill Lynch. Please go ahead.

Olivia Brindle

Hello, so first, two questions. On the tailored transactions, there was a comment you made I think in the - some of the headlines from the media conference, which said that those tailored transactions would likely have an upward impact on your combined ratio. Just wondering if you could elaborate a little bit on that, I mean, given that is a mix of different lines of business, presumably it will push it up to the extent that it's large casualty deals, but also where you do shorter tail and lower combined ratio tailored transactions as well.

So just wondering what - how do we understand that comment? Whether you are saying that overall those deals will have a higher combined ratio and so just some color around that would be helpful?

Second question around capital, so, I think historically you've been very clear that you will return excess capital, but maybe not as clear on exactly how you determine the level. So, firstly just wondering why you've decided to go with $1 billion today and how you come to that being the right number.

And also the second part of the question, how are you thinking about the right level going forward? I mean, if I look at some of your comments on the outlook for the market, they seem reasonably cautious. How is that leading you to think about capital in terms of whether you might want to hold more or less? Thank you.

David Cole

Alright, excellent. Of course I made the comment this morning you're referring to that, first I'll give Matt a chance to explain my comment and then maybe I'll add to it and I'll come back, Olivia, to your second questions around capital.

Matt Weber

Okay, look, four years ago, when we looked at the pipeline of large and tailored transactions, many of them included Nat Cat exposure. This portion of the pipeline right now we pretty much cannot write anymore, because under EVM. It’s just not profitable anymore. So as a result of this, our large transactions and tailored solutions on the P&C side are more weighted towards long tail lines and that automatically increases the combined ratio.

David Cole

Okay, thanks. And then the second question about the capital level and why 1 billion, on the one hand, I'll give a short answer but then I'll give a little bit more context. The 1 billion was actually what we asked authorization for from the shareholders earlier this year and under the Swiss rules, we actually need to have that authorization in order to give us the flexibility to launch such a program during the course of the year.

We've talked in the past about how we look at our capital management philosophy, participations and that really hasn't changed. When we started from the premise of maintaining superior financial positions at all times, we certainly would like to maintain the regular dividend and we would like to grow it where we've been successful in investing in the business.

And we still will invest in the business, if it meets two criterias online with our strategy, one that we’ve committed and it meets our financial hurdles and for large allocations of capital of course we make sure that the hurdles we apply are sufficient to compensate for the allocation of capital and the risk associated with the transactions.

And then when we find ourselves with excess capital, then we look for ways to give it back and we said for a number of different reasons having previously done the special dividend the repatriation from tax-advantaged account that we would look for the repurchase program as one that gives flexibility and also based on feedback from our shareholders, one that most shareholders have indicated they have a preference for.

Now in terms of the amount of capital that we hold, it starts with this premise of maintaining the superior financial condition and we’ve expressed that simplistically in the form of an SST ratio of 185%. We think that gives us a very strong position. The ability to absorb large losses and continue to be meaningful and active and engaged with our clients even after large losses would occur.

Now we hold some buffer. The buffer is intended to provide a little bit of protection for the inherent volatility of our P&L. So we hold a dividend reserve and we hold a buffer for what we think to be potential – they are not earmarked, potential investments that we may wish to make over the course of a 12 to 24 month period. And when we held the capital that is above that level, then we think about returning it to shareholders.

Now this year we asked for authorization for $1 billion. You made a comment about what may happen going forward in the market outlook. Certainly, we'll come back to that in February when we bring you our full year results and we speak to you a little bit about what we want to do on the dividend side.

So let me just hold off a little bit with any comments about what we may say in February, but we'll come back to it. We won't forget.

Olivia Brindle

Okay, thank you.

Operator

Your next question is from Guilhem Horvath from Exane BNP Paribas. Please go ahead.

Guilhem Horvath

Yes, thanks for taking my questions. The first one is on the pipeline, which you mentioned. So, can you give us a little bit of color on how optimistic you are on this pipeline on tailor-made? And maybe also the gross number for P&C Re excluding the tailor-made deals? And the second is coming back to rental profits, both in P&C Re and CorSo and if you can tell us what we should expect as a normal rate as a percentage of the common ratio for the coming quarters? Thanks.

David Cole

Okay, thank you. Matt, over to you.

Matt Weber

Okay. So the second - the answer to the second question will be very short. But let me take the first question first. So the pipeline looks good and we are happy with it. However, we have to be aware that the hit – the pipeline has to look good, because the hit probability is far away from 100%.

With respect to the Open Market Reinsurance business, the business that is shown to almost everybody often by a broker. In that segment, since the beginning of this year, we have shrunk by approximately 4% relative to what was up for renewal. The answer to the second question is, we reserve to the best of our knowledge. So my only advice can be please assume no reserve development going forward.

Guilhem Horvath

Thank you.

David Cole

Alright, thank you very much. Next question please.

Operator

The next question is from William Hawkins, KBW. Please go ahead.

William Hawkins

Hello, thank you very much. The P&C running investment income was $210 million in the third quarter, which is a pretty low number and I know that the yields are coming down in the rest of it. But I am just wondering, is there anything funny going on that makes that an unusually low number or should we taking that as a guide in the future?

And then secondly for the two life divisions, the increase in unrealized gains this year is dragging your return on equity by at least 2 percentage points. I know that this year's results are being flattered by realized gains, but you also seem pretty confident in maintaining your range guidance that you gave about a year ago in spite of that unrealized gain drag. So what should we infer from that?

I mean, is there something - anything you can point to specifics that's going better in Life and Health or Life Capital? Or are you now expecting to be at the bottom-end the range rather than the top-end of the range or is there anything else that explains how you're maintaining that guidance in spite of quite the drag from the unrealized gains? Thank you.

David Cole

Excellent, thank you, William. I will ask Guido to respond to the first and I’ll pick up the second question.

Guido Fuerer

Thanks. In this back stuff running yield and gain realizations and could you have to put it in a broader context. If you look a bit at gain realization, this is part of the nature particularly in a portfolio which has some portfolio activity similar to Matt has described on the insurance and reinsurance side.

Of course, we look where we see some more value for the same capital in it potentially than shift. Based on that, you should always see some gain realization. Again if you look at now and I can get you picture, coming back to your question on the P&C side, and I could get you a picture to be around 25% this gain realization, if I basically compare the total investment income on the group level.

Now if you look through that, you see it's a good competition and just to give you one figure out of this 267 overall gain realization, 90 comes from government bonds, the rest basically two-thirds is either corporate, equity alternatives or in the principal investment area. That's why it's a good competition.

Now, if you take that as an input particularly if you look at equity or maybe corporate credit, we came to a conclusion that we saw rich markets in particular it was on the corporate credit side spread-wise. If we look at beginning of the year, kind of the investment grade in the US were around 165 basis points, respect of the spread above government. Now we are around 130 and we believe these are good levels to take some of the profit and this exactly happens in P&C.

Similar point also on the equity side again, we reduced equity a bit in Q3 and again this has led us to the conclusion that there is a better deployment for the capital. And then this you should expect clearly in a P&C portfolio, but you should also expect to a certain extent in Corporate Solutions, although that's much smaller.

Now in the Life and Health, and in the Life Capital area, that's much more kind of a buy and hold portfolio. Now over there, you see some moves again, we have Guardian. Guardian is a major acquisition to Life Capital piece, of course taking on new assets and having at the same time some Solvency 2 introductions, but in respect of matching requirements again has suggested to take some of the profits on government bond and basically locking in attractive corporate credit spreads.

That's why at some gain realization, you should take as a natural kind of capture of economic opportunity and even government bonds, even there, I think you should expect some true economic driver behind it and Life Capital was a good example. When we acquired Guardian, we were long in respect of our economic position.

That's why we took clearly the lowering of UK yield as another reason to basically may bring closer to economically match position. That's why gain realization per se is clearly driven by economic views and economic positioning which we do.

Now, looking at the running yields on the P&C side, again you see it's around 2% at the moment. And this fluctuates a bit between 2.1%, 2.2%, if you go back, yes it was slightly higher 2.3% last year. Of course, if you have an active portfolio approach, it's very natural that you have a quicker integration of the lower yield environment compared to a buy and hold.

On the other hand, these are the portfolio which allows to take economic position. I think more of optimistically than in your Life and Health, in your Life Capital complex. But kind of the bottom-line message is, running yield, it's one indication where one important contribution is in respect of future investment income, by far it's not the only one. And that's why we clearly add additional economic values through active positioning of portfolio, which will lead hopefully to some gain realization.

David Cole

Thank you, Guido. Actually, part of your answer to the first question already segues into William's second question on the Life Capital side. We did have of course an extraordinary level some gains in the first half as we were positioning the portfolio we had acquired to Swiss Re's governance and Swiss Re's approach to capital regimes.

But William, your comment is spot on obviously, with very low levels of interest rates that has inflated the equity element at this ratio, it becomes increasingly challenging for us to hit that 10% to 12% range. Still, we remain committed to it. It's not easy. It's intended to be ambitious in fact. Since we announced that several years ago, I think we've been successful notwithstanding inherent volatility that comes. It's not going to be possible for us going forward to hit that range every single time.

But if you look at this business for what it is, it's a long duration business. We think we have a very strong portfolio. We took a number of measures several years ago to address it. We continue write what we believe to be very attractive business. I think that they were in a good position to be able to deliver a good steady stream of income.

The actual position in the range maybe on the upper side, maybe on the lower side from time-to-time, depending on what happens with the equity as a component. But we remain convinced that the business that we have on our books is a good solid business and that we continue to have opportunities to write good new business.

William Hawkins

Okay. But there is nothing sort of specific top-down you referred to, so, a normalized result, but you could say inflation is being great. That helps our combined ratio. When I'm looking at the Life business, I can say higher unrealized gains hurts your ROE, but your outlook still staying confident. There is no sort of a single big picture issue that you'd point to that's helping your returns there?

David Cole

I think it's diversified book. The fact that we have taken measures to make sure that we respond to portfolios that were underperforming. When we set the range, of course we already had factored in -- I won't say we were exactly right on interest rates, but we factored in that it could move up or down depending on what would happen.

As Guido just indicated, I mean, at this point in the economic world and financial markets, you almost can touch the portfolio for even normal stuff without realizing some sort of gain here and there. But we're not accelerating gains for financial reporting purposes that we have a high quality portfolio, both from the liability side, as well as on the asset side.

But while we accept that there may be some volatility in that range, we've been outside of that range. We've had several quarters where we were actually well above the 12%. We think if you look at this business over a longer period of time, then we are going to be in a good position to achieve that. It won't be easy, but that's what we will strive to do. Thank you.

William Hawkins

Thank you.

David Cole

Yes, next question please?

Operator

The next question is from James Shuck, UBS. Please go ahead.

James Shuck

Hi, good afternoon. Two questions from me please. Just wanted to return to the capital position and your view of it. I guess, listening to you, you keep using the word kind of flexibility. I am intrigued why you need so much flexibility if you like, because the $1 billion buyback itself, as you already alluded to gives you flexibility to cease that if you do get a large loss. And your capital position both on S&P and on SST gives you buffers on top of buffers.

So I'm struggling to see why you need to introduce an element of uncertainty over this buyback that you are announcing now. I think historically, you've kind of said we want to see how hard it can cease and work through, but I think the reality is that your peak apparels are much more evenly spread throughout the world.

So, if you could just shed a bit a light on that, I suppose a linked question might be, I mean if Hurricane Matthew had made landfall at a $20 billion loss, would that have actually stuffed with the buyback at this stage?

That's my first question. Secondly, is a more general kind of conceptual point. I mean, over the past, I suppose one to two years, you have been growing in casualty more than others and it seems like a kind of counter kind of cyclical approach if you like. If we look at the results coming through in casualty, that those results don't look great.

The combined ratio is consistently above 100 and in Q3, it was at 102.6. What do you make of that strategy to have grown in casualty? Was it the right decision in hindsight? And what's the outlook in that segment, please?

David Cole

Okay, thanks. I'll pick up the first question and then I'll ask Matt to respond to the second. So the flexibility, actually, we believe that it's incredibly important to maintain flexibility while we want to always have the superior capital position, we also need to be agile and able to respond to opportunities that come our way and these opportunities are not always easy to predict. Indeed, correct me, referred to the last couple of years only last year that we actually started with the buyback program, now this year is the second one.

We said we want to wait a little bit into the year to see both how our capital develops, how our income develops as well as what opportunities we see to invest. They can change very quickly. I won't respond exactly to what would have happened had Matthew hit and had it been a certain level of loss, but this is exactly that type of thing that we would like to be able to respond to it and If we get into a situation or we find ourselves in a situation where the market opportunities to deploy the capital are attractive, we want to be able to do that.

So our shareholders I think understand it. We have discussions with them about that. The idea of the share repurchase program is it gives us an opportunity if we come to conclusion during the course of the year that the capital buffer that we've built out is really excessive of what we think we should hold.

We can go ahead and start returning capital to shareholders in advance of the full year result announcements and the full year dividend discussion. So I think the flexibility is one that we think is absolutely appropriate and it may even be essential in order to allow us to respond to these opportunities that can come our way. They can come from different sources by the way.

So, we are looking for opportunities across all of our business units. It needs to make sense. We want to deploy capital, as I mentioned earlier, both strategic sense as well as financial sense. If we come to the conclusion that we hold more capital than we recently expect to be able to deploy, then we look to get it back.

With that, I will ask Matt to respond to the second question.

Matt Weber

Okay. So, with respect to casualty, given the highly combined ratio and high – actually, it's not that high, it is above 100%. But given the fact that the combined ratio is above 100% was it the right decision? I would like to give the following answer. Not this quarter, but in the past, we had some quarters where the combined ratio was high given adverse developments coming from asbestos. We would have had these adverse developments with and without new business being written.

Secondly, a good portion of the casualty growth, not all, but a good portion of the casualty growth came along with growth from large transactions. And we just recently reviewed our total large transaction book and concluded we are very happy with how it has performed over the last five to six years.

So boiling your question down to the so-called flow business, which is not a fantastic expression. I would describe it as follows: on the liability side, it was the right decision. We are happy with what we are seeing. Of course not every individual deal behaves the way we anticipated, some behaved better actually, some a little bit less, but overall we're happy.

On the motor side, I admit the underestimated severity and frequency of losses. So we're looking at our book there. We are not entirely happy. On the work comp side, where our strategy is and has been for a very long time to not write the high excess business, but focus only on some proportional - some very few proportional treaties and operating in the primary side in the first $2 million. We are actually very happy with this position.

David Cole

Thank you. Next question please?

Operator

The next question is from Frank Kopfinger, Deutsche Bank. Please go ahead.

Frank Kopfinger

Good afternoon everybody. I have two questions. My first question is also on the P&C reinvestment income and it's going into the same direction then William's question on the $210 million in investment income. I was also surprised to see that this low level despite the fact that you had some quite a significant volume growth in the past, which should also have had to compensate the declined investment yield.

However, we have noticed this lower level of the $210 million and I would like to rephrase it again. Is the $210 million is the right level that we should look going forward?

And then my second question is on the buyback, could you shed some light on your thinking behind the timing now? Because, we have now a shorter timeframe until the mid of February and what were the drivers and your thoughts behind that?

David Cole

Excellent. So, I'll ask Matt to respond to the first question and then I will come back on the second.

Matt Weber

I am sorry, Guido. Sorry Guido. You had a chance.

Guido Fuerer

Not a problem. Right on the investment.

Matt Weber

I apologize.

Guido Fuerer

Again, P&C, that you should expect most of active positioning. That's why if you look at the underlying portfolio, of course it has the shortest duration compared to Life and Health, that means, in respect of fixed income, yes, you see probably just based on the duration, you see a lower kind of current investment income. Now, it's very – actually, there is no way to give any forward guidance.

Again, I mentioned, this is an active book and again if the composition equity now we - as I mentioned before, we sold in Q3, this is a massive sell-off in equity market. Maybe this will change our appetite in equity.

Similar with corporate credit, again, we reduced corporate credits. We took profit based on the spread tightening. This was the economic profit taking. And again, if a spread developing in a different direction getting extremely wide and we believe now it's a good point to go back. We will see a different line in respect of current investment income.

That's why - important is that you consider that part of the book, there we can take, let's say the best – that’s a best place to take economic position. You should expect more turnover in that book, compared to the other one, which I refer to, which is Life Capital and life and Health. That's why the composition of returns are different.

In respect of guidance, again there you see the biggest realized gain out of REs, which I mentioned before, which of course has an impact on the underlying running yield. On the other hand, again if things are changing and let's say, if yields are going up, of course, this offers enormous potential to not only deploy cash, which we are holding, but again achieving higher net investment income line, just based on the yield. That's kind of my answer to your question.

David Cole

Thank you, Guido. Let me come back to the question regarding timing of the buyback. So, I saw a few comments about that this morning and I am very happy to give some insights here. You may recall last year, we announced our intent to launch a program, but it was subject to receiving various regulatory approvals and then we received those approvals, we were able to launch the program off the top my head somewhere around the middle of November and then we concluded it the very beginning of March.

I think it was the 12th of November till 2nd of March. When we look at it this year, we said, maybe we can actually try to achieve the following that we go ahead and start the program very quickly after announcing it. And in order to do that, we actually sought requisite approvals in advance of it being formally agreed to by our Board yesterday.

It was subject to their agreement of course, but we actually were able to go ahead and achieve those agreements in advance of announcing our Q3 results. And we have - I think our full year results announcement for 2016 I think it's scheduled around the 22nd or 23rd of February. So actually, there is not a whole lot of difference here.

We hope to conclude the program now by the 17th of February. So if you look at it, the actual number of days, it is actually just a few - perhaps a few days shorter than it was last year and we just want to be able to include the outcome – the final outcome whenever we announce our full year results.

Just like last year, you can track where we're getting to with the program on a weekly basis on our website and of course there are rules that we also govern how active the purchase program could be in the marketplace.

But there is no, Frank, there is no additional thinking our guidance other than we see an opportunity to launch it a little bit earlier than we did last year and we would like to try to close it by the time we actually announce our full year results. It’s just a tempo.

Frank Kopfinger

Okay. Thank you.

Operator

The next question is from In-Yong Hwang from Goldman Sachs. Please go ahead.

In-Yong Hwang

Hello, thanks for taking my questions. I've got two and firstly on the large tailored transactions. You talked about the impact on the level of combined ratio going forward from the growth there. But anything can talk about in terms of volatility of the combine ratio going forward and I would imagine some of the capital release stuff should have a bit more stable profitability.

So does that mean that we should expect low volatility going forward? And I guess related to that, some of the outside losses that we saw this quarter in terms of agricultural losses and motor, is that related to large transaction that was out moved from flow business.

And the second question is around, just a quick on the Corporate Solutions. You talked about the kind of the market situation there. Is there anything that you see currently that makes you a bit more positive about growth going forward? Thank you.

David Cole

Okay, just to be fair, should I ask Guido to answer?

Guido Fuerer

I’m sorry.

David Cole

Okay, Matt, how about you give it a try?

Matt Weber

Okay, I will try and then Guido can clean up after me. So with respect to, will we have more volatility given that we expect over time to continue to write more large and tailored transactions? Possibly yes but not necessarily, because a portion of the volatility comes from Nat Cat and right now, we are really not including Nat Cat in almost any of the large transactions.

We are writing. So in the short-term, I would say, maybe we might even see less volatility. Of course, if you write more long tail related large transactions, this means, while you pick up less shock risk potential, you expose the balance sheet to more trend risk that comes without saying the actual losses came to a very large extent to our agricultural flow business book.

On the Corporate Solutions side, look, we are now in a soft market and we are not in a hard market. This does not mean that every piece of business is bad. Of course, there are segments where we are still writing and feel good about it and of course, your question to be – could be what are the segments.

If you intended to ask the question, I am not intending to answer it, because that's a trade secret. But it's not all bad, but given the past years, it is absolutely necessary that now we enter cycle management territory. We actually have started to do this already on the Corporate Solution side. For instance, with respect to umbrella business, we shifted our book from high asset business to lower asset business. We have shifted our book already from large companies to medium-sized companies.

Off-shore energy, we have massively reduced over the last several months. Aviation, we are very selective on large airlines. We are writing almost no space business these days, because we just couldn't do it in a profitable way.

I mentioned already on the property side, we have reduced our peak Nat Cat exposures also on the CorSo side, but also on the reinsurance side and in Corporate Solutions, we are very cautious in Brazil. We continue to do that and some industries such as for instance steel producers, we almost don’t write them.

In-Yong Hwang

Thanks for the details, very helpful.

Matt Weber

Thank you. Next question please?

Operator

The next question is from Stefan Schurmann, Bank Vontobel. Please go ahead.

Stefan Schurmann

Yes, I just have one question on basically the view on interest rates. I would be eager to see how you expect interest rates to move going forward, if you see any adjustments necessary, basically in terms of ALM, maybe also giving an update on the asset liability mismatch at Q3 or to-date, if possible?

David Cole

I am sorry, I didn't hear the very last part well, Stefan. Could you repeat the very last part?

Stefan Schurmann

Yes I mean, just on the ALM mismatch, if you could maybe update us, if there was any change or if you see any need for a change going forward in terms of your view on interest rates?

David Cole

Okay. Thank you, that's clear. Guido you want to?

Guido Fuerer

Thank you. The view on interest rate is, we expect lower for the hour. That means there is no price in hope that yields should sharply go up. That’s also the base and how we cost the business on the Reinsurance and Insurance side, that means, we always work with the current yield curve whatever the market is pricing.

From that point, a few of you can argue, somehow neutral from a business point of view. Of course, the overall industry higher yield will tell. And our forecast is clearly not an upbeat one. That's why you also saw the reduced time of equity EBITDA on the corporate credit side. Then we think - believe now we see a lot of support in the market, from very common and this clearly cannot last forever.

Now, the mismatch question, which you raised, Swiss Re is pretty much neutral. We were neutral already in Q2. We capped that position. It's a very, very tiny short position. That means from an overall point of view, Swiss Re group is basically from, again talking about ALM from economic point of view, not taking any major interest rate position.

You saw that the huge unrealized gain position, which we have in the book. Of course, you know this due to the GAAP treatment of our assets that's why we have to make distinction between ALM, which is more economic description, compared to GAAP one. But again yield-wise, we assume that the current yield deserts will not disappear.

That's why we try to position portfolio in areas where we still believe we have a relative value. And again, the relative value comes from the structure of our book, be it in which market it can work, again if you only have a Swiss book, I think it would look very different compared to very global on which we have, which is dominated by US dollar. Again, US dollar compensates you for some of the risks.

That's why, overall, I think we can live as you can see the investment results are not completely immune. On the other hand, you see quite a sticky part in it, again based on the fundamental loan book which we have.

Stefan Schurmann

Okay, that’s very clear. Thank you.

David Cole

Thank you, Guido. Next question please.

Operator

The next question is from Vikram Gandhi, Societe Generale. Please go ahead.

Vikram Gandhi

Hi, thank you for taking my questions. The first one is on, can you update us on how the Chinese market has evolved post-implementation of C-ROSS, now that you're close to one full year under the new regime?

Are you seeing a shift from the regular more to quarter share to, let's say the Cat business? And secondly, can you please explain how the Life Capital cash generation was so high during the quarter, despite the dip in the interest rates? Thank you.

David Cole

Excellent. So Matt, do you want to respond regarding China, and I'll respond regarding Life Capital?

Matt Weber

So in China, C-ROSS had exactly the expected effects. We saw - let me say, less incentives for clients to buy motor and more incentives to buy Nat Cat and we saw a little bit shift and we expect this to continue.

David Cole

And regarding the gross cash generation of Life Capital, it is a combination of things. First and foremost, I think it really is the most important underlying business is performing well. Certainly in line with our expectations. We have a number of offsetting elements and we have a lower interest rate, slightly lower interest rate, of course, which tends to pull that down under the Solvency 2 regime that our close life business operates in the UK.

Offsetting that, we continue I thing to be successful in finding synergies and delivering synergies, reducing our expenses loads. There is also a number of other quasi one-off things that impact us in any given quarter. We also have of course as you see in Q3 the positive benefits of lower tax rates being enacted in the UK.

So, a number of different elements contributed to the quarterly gross cash generation. I think if you look at the first nine months, you'll see that we're on track. A number of things are also there in pluses and minuses, but the most important thing is, that the underlying business is very much performing in line with our expectations. Thank you.

Vikram Gandhi

Okay, thank you.

Operator

The next question is from Michael Hyde from Commerzbank. Please go ahead.

Michael Hyde

Thank you very much. Good afternoon. Coming back to the result releases and inflation, I have a hard time believing that I should assume zero run-off profits for you going forward. When you reserve new business initially, you obviously take into account expected inflation. If later on, actual inflation turns out to be lower as you initially reserved for, you must have run-off profits.

Your reserves are usually on your back book for several years. That's the nature of long tail business. That means that you probably must have more run-off profits to come as I have a hard time to believe that you are reserving based on the current low inflation levels. Did you release all reserve redundancies that came from the low inflation environment, which we currently have or what is the mistake in thinking that I make?

David Cole

Excellent. Thank you, Michael. Matt, do you want to respond?

Matt Weber

Look, the reserve – the inflation and tighter way maybe it's important here to say, when I use the term inflation in the context of our reserves, I mean, of course, loss relevant inflation. And since this affects mostly casualty wage inflation and even more importantly medical inflation is what matters. So please don't think of inflation as CPI type of general inflation. The problem is right now, the inflation also the medical inflation is very low.

However, our reserves are here to pay for the losses and the loss developments also in the future. And we have absolutely no guarantee that the relevant inflation pieces including wage inflation and medical inflation are going to stay where they are right now. You heard concerns coming from the UK.

In the US for instance, wages are going a little bit up. There is some uncertainty related to the future US President and together with this uncertainty, there is also some uncertainty related to a CA Obama Care and that could have an impact on inflation. So personally, I take the low inflation the way it is currently, but I do not think it’s going to stay very currently for always and ever.

David Cole

If I just may add to that, we have a very well established and consistent approach to reserving for all of our businesses and certainly for the long-term business which is extremely important. And we position ourselves prudently within the best estimate range. We look at all of our business effectively every quarter around the globe, Time-to-time, we do some very deep dives.

The effects that you are just referring to, we have seen as the industry has seen as well over the course of the last several years. So, time will tell of course how these reserves now evolve over time. But I think what’s important is that, we are not somehow hiding capital in the form of incremental buffers on reserves.

We are not changing our reserving policy and just like we are not trying to accelerate gains on the asset side. We are not trying to manage the realization of our best view of what the ultimate loss ratio, the ultimate loss levels are going to be on the exposures that we have. So it's very key here that we maintain consistency.

We do position ourselves in a prudent basis within the best estimate range and we report on that on obviously a regular basis, and once a year a little bit more detail.

Michael Hyde

Is it fair to say that the reserve releases or the run-off profits that they generally come from business which is close to be settled or - settled?

David Cole

No, I think as Matt indicated earlier, it comes from a wide range of businesses across all the various geographies. So there is not a single vintage if you will, if I understand your question correctly, it really is looking at our entire portfolio across all lines of business across all geographies.

We have seen a fairly consistent, if you look at over the course of last handful of years, consistent positive development amongst other reasons of course, no doubts coming off the back of the inflation levels that were lower than what we have originally costed, we were conservative in the costing and maybe some other things contributed to it as well.

Michael Hyde

Okay, thank you, thank you very much.

David Cole

Thank you.

Operator

The next question is a follow-up question from Olivia Brindle. Please go ahead.

Olivia Brindle

Thank you for the follow-up. And just on CorSo, I mean, you talked about some of the issues in that business at the moment. I am just looking at the expense ratio, which was almost 39% in the quarter and you referred to some ongoing investments in that business. So just wondering whether there was anything specific in that quarter that we consider strip out?

And what is the sort of expense ratio that we should be thinking about going forward? Obviously, 39 is a very, very high level, it doesn't feel like that's a number we should be extrapolating, but equally it's probably a little bit higher than in the past. So just some color on the expense point would be helpful?

David Cole

Very much appreciate the follow-up question. So, let me put it into the context. From time-to-time, I see comments about people looking at CorSo and indeed they want to look at it on a quarter-by-quarter basis and try to extrapolate that into the future based on the number of different factors including things like combined ratio, normalized or not.

While I can understand it, I think it's important for everyone to realize that we see a business opportunity here that we have decided to invest in and it's really a long-term investment program, based on what we see to be a very long-term attractive market. CorSo has a relatively modest position.

It's a growing position that we are very pleased with the growth that we've shown over the last handful of years. But it's a market that we believe that we can continue to experience profitable growth going forward.

Now it’d be silly for us to put on the gas, put on the brakes, put on the gas, put on the brakes based on any individual quarter's results. Specific to your question, Olivia, I would estimate it's probably 2% to 3%, something in that range. It is not to be the same exactly every quarter or so. But our expense ratio is probably elevated beyond what we would see as where we would aim to achieve going forward, as we are investing in this business.

Now from time-to-time, our premium levels are up or down depending on things like FX rates and things like, is it a soft market, yes or no, all these things are relevant to us and we certainly don't ignore them. But we can't base our investment program on one quarter's results. I really encourage everyone try to take a step back from that when they are thinking about corporate solutions.

Look at our results over the last couple of years. Look at the market opportunity. Look at the capabilities that Swiss Re has and kind of go with us in understanding that investment case. Thank you.

Olivia Brindle

Sure.

Operator

The next question is a follow-up question from Guilhem Horvath from Exane. Please go ahead.

Guilhem Horvath

Yes, thank you. It's also a question on cost. So, I hope you will not be able to stick on to the same. It's actually on the credits and the loss ratio – on the combined ratio, which spiked this quarter, compared to last year.

It's actually quite contrary to what we see on the monoliners, which tend to normalize a little bit on the loss they have in Latin America and Asia-Pacific. So can you comment on this? What's your view on what's happening on credits in these regions? And what's your outlook? Thank you.

David Cole

Thank you for the question. Matt do you want to?

Matt Weber

Can I ask quickly, what - could you define for me monoliner, please? Because there is more than one definition that is possible.

Guilhem Horvath

Yes, well, I would define the monoliner, for instance, Euler Hermes these kind of place which have a great uncertainty for instance, but not the growth range of business that you have.

Matt Weber

Okay. Look, I cannot comment on what some of our clients are doing or experiencing. I can only comment on what we are doing and what we are experiencing. On the credit side, in Corporate Solutions, we have experienced an increase in loss activity recently. On a global basis, we have seen a higher frequency this past quarter of small and mid-sized losses. We did not see that in Q2 and we did not see that in Q1.

However, we saw it in Q3. So at this point in time, we believe it's a quarterly an aberration, but we are staying alert and continue to observe. In addition to that, as I mentioned already we are taking a bit of capital off on the credit and surety side in Corporate Solutions. In addition to that, we have seen in Asia a bank trade and infrastructure loss of the order of $10 million approximately.

This is a type of losses which sometimes happen in most quarters. They do not happen, but sometimes they do happen and whenever such a loss happens on the Corporate Solutions side, it immediately has a 10 point combined ratio impact, order of magnitude.

David Cole

Thanks, Matt. Can we go to the next question please?

Operator

The next question is from James Shuck. Please go ahead.

James Shuck

Hi, just quick follow-up for me, actually. The new Rhode Island Legislation potentially going to open up the market to close the business in the US. I appreciate you can't comment on particular deals and things, but you could perhaps just comment about what your appetite is for dealing in that sort of market, were the market to open up as it might be?

Matt Weber

At this point, it's not yet fully established. Nobody has experience. So it's too early to talk about our appetite.

Philippe Brahin

Okay, thank you. Thank you Matt. I think, this is Philippe here, and I think we have come to the end of our Q&A. So I wanted to thank you all very much for joining. Also a special thanks to Matt and Guido for joining us today.

So don't hesitate to reach out to any member of the Investor Relations team if you have any follow-up questions on our Q3 results. I also wanted to mention that we will host our Investor Day on 2nd of December, in Rueschlikon, near of Zurich. The agenda, the registration is available on our website and we hope to see many of you at our event, as we will present an update on our business priorities and strategies.

[Call Ends Abruptly]