HNR1: Further evidence of cyclical pressures at Q1

Research evidence excerpt

HNR1: Further evidence of cyclical pressures at Q1

10.1x

CSM forecast for a c.€80m decline y/y, assuming a 4% combined ratio BVPS Diluted 107.20 121.28 133.61 145.89EQUITY deterioration from the April renewals. Prev. 119.85 131.98 144.35

P/BVPS 2.22x 1.96x 1.78x 1.63x

Continued reserve build despite strong starting position DPS 12.50 13.00 13.50 14.00

Management confirmed further reserve resiliency additions in Q1, building Div Yield 5.2% 5.5% 5.7% 5.9%

on the €3.2bn undiscounted balance at FY25 year-end (8.6% of nominal ROE, Adj 21.4% 19.7% 17.8% 16.9%

reserves including risk adjustment). The unfavourable reported run-off Prev. 20.1% 18.3% 17.6%

result of €48m in P&C reflects further prudence despite favourable

underlying releases, suggesting c.€250-300m of reserve strengthening in DPS:All valuesIncludingin EURspecialsunless otherwise noted.

the quarter. L&H also saw prudent assumption updates, primarily for China Priced as of prior trading day's market close, EST (unless otherwise noted).

critical illness and morbidity business. Despite softer pricing, management

remains "far from drawing down" reserve buffers and expects continued

resiliency build.

LSD EPS cuts, lowered target PB on ROE outlook

Management reiterated 2026 guidance including the MSD FX-adjusted P&C

growth target, noting the "lower end" of the range is now more likely

(we note there is no stated range). We have reduced our P&C revenue

growth to 2% in FY26E (from 6% previously), with our 5% out-year growth

forecasts unchanged. L&H and investment assumptions are little changed.

Our solvency decreases 10pts to c.250% p.a., from a lower starting solvency

in Q1 from market movements and a guided SCR increase from capital

deployment.

The lowered FY26E top-line feeds through to FY27E/FY28E for -2%/-2%/-3%