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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by. I welcome you to today's Hannover Re Conference Call on Q1 2023 Results. For your information, this conference is being recorded. [Operator Instructions]. At this time, I would like to hand the call over to your host today, Karl Steinle. Please go ahead, sir.
Thank you, and good morning, everyone. Welcome to our earnings call on our results of first quarter 2023. Definitely sounds spectacular, but this is the first time we are presenting our figures according to the new accounting standards IFRS 17 and be the [ first ] time. This morning, the speakers are, as usual, Jean-Jacques Henchoz, our CEO; and Clemens Jungsthofel, our CFO. They will give a brief presentation, after which we will have plenty of time for your questions. At this stage, we will also have Klaus Miller and Michael Pickel, who will also commenting our Life & Health and P&C reinsurance business, respectively. With that, I would like to ask Jean-Jacques to kick things off.
So thank you very much, Karl. Good morning, everyone. Thank you for joining our call today. We remain in a rather uncertain and volatile geopolitical and macroeconomic environment, but I'm very pleased to say that the business development of Hannover Re has not been affected by larger extraordinary events in this first quarter of the year. Group net income of EUR 484 million reflects, I believe, a good start to the year and fully supports all our targets for 2023. In P&C reinsurance revenue according to IFRS 17 remains stable, largely reflecting the P&C renewals where our portfolio management has a clear focus on improving the quality of our book of business. In particular, we've shifted our capacity towards nonproportional treaties where we expected profitability and price adequacies have improved significantly in the past renewal. Furthermore, IFRS 17 changes earnings of the reinsurance revenue to a more exposure-based pattern. So the outcome of later renewals will be visible over the course of the year. The loss situation improved significantly compared to the previous year. Large losses were slightly below budget and the impact from COVID-related claims in Southeast Asia decreased as expected.
In Life & Health Reinsurance reported COVID-19 claims decreased to EUR 11 million, not affecting our result in a meaningful way anymore compared to previous years. The reinsurance revenue in Life & Health is mainly reflecting volume effects connected to in-force management actions in our U.S. mortality portfolio. The strong reinsurance service result is supported by the continued healthy profitability in financial solutions and longevity.
Additionally, the transition to IFRS 17 and the unlocking of assumptions result either slightly higher profitability for our mortality business now also being a more significant and stable contributed to Life & Health results. With return on investment of 2.7%, the investment performance was favorable this quarter, a strong ordinary income is mainly driven by higher interest rates and additionally supported by the contribution from inflation-linked bonds in this quarter. Altogether, the return on equity of 20.8% and the solvency ratio of 261% highlights the strong earnings power and capitalization of the firm. Shareholders' equity increased by 5.2%, mainly driven by Q1 earnings. It may change compared to the previous accounting -- is the discounting of liabilities and the recognition of the respective impact of changing interest rate in the OCI due to our strong asset liability matching and the change in the reinsurance finance result within the OCI largely offset the change in unrealized losses on our investments. The CSM increased by 13.3%, mainly driven by the new business value generated by our successful January renewals in P&C. The risk adjustment increased by 2.9%. All 3 balance sheet items reflect value for our shareholders, but in different ways, reported profits are accumulated in shareholders equity due to profits in the CSM and furthermore, the risk adjustment can be seen as a buffer for uncertainty. But if the business runs according to expectation, this will be released into profits as well. On that note, I'd like to hand over to Clemens who will do a deep dive in our figures for the quarter.
Thank you, Jean-Jacques, and good morning, everyone. Yes, Karl, as you mentioned after nearly 2 decades, we are finally there with the new insurance standards. And in my following remarks, I will, therefore, try to provide a bit more details than usual when it comes to IFRS 17 related topics and then particularly on the P&C side, I will also put a bit more emphasis on the current quarter versus expectations and guidance as opposed to comparing numbers to prior year. I do hope that you also find this useful approach. So P&C, to start with P&C, the development where we have grown our book substantially over the last couple of years, the newly defined top line in the first quarter, largely reflects the outcome of our January renewal. Here, our clear focus on quality and the corresponding shift towards nonproportional business in combination with higher retention and some portfolio pruning on the proportional side did have an impact on volume. But at the same time, we recorded substantial margin improvements -- sorry, there. Disconnection here. Apologies.
So I'll just start again. On Slide 6, we are on development on P&C. Again, here our clear focus on quality and the corresponding shift towards nonproportional business in combination with higher retentions some portfolio pruning, on the proportional side did have an impact on volume. At the same time, we reported substantial margin improvement which is now very visible in the new business CSM, contractual service margin in the first quarter, which is mainly a reflection of the 1/1 renewals. At EUR 1.5 billion, this number clearly increased compared to the prior year. Another indication for the improved quality of our renewed portfolio is the low loss component for new business. Now I'd say, generally, our unchanged, cautious, reserving approach can usually result in a loss component, and this can result in seasonality connected to the renewal date. But the likelihood of having a positive CSM, instead of a loss component is, of course, depending on the market environment.
So let's say, in a favorable pricing environment, even combined with higher interest rates, we would structurally report lower loss components for the new business, which we are actually, currently in such a positive environment. This is what we see here. So the new business value will be earned over the so-called service period. So we should expect a larger portion of this being earned in 2023. Mechanically, in the new accounting regime, the CSM will be released into revenue and then contribute to the reinsurance service result. Generally, this is, I'd say, less front-loaded compared to a gross written premium view under IFRS 4 as the revenue under IFRS 17 is already, as you know, earned numbers. Another difference compared to IFRS 4 is the growth of our structured reinsurance business, part of the business growth is connected to treaties with a rather higher level of commissions and non-distinct investment components, which are typical features in this line of business. But as you know, those components are deducted from the reinsurance revenue, meaning that the growth in structured reinsurance slightly subdued compared to traditional premium numbers. Altogether, we still expect to see growth in our P&C reinsurance revenue. And the successful April renewals are the first step. On large losses, they amounted to EUR 334 million. That is EUR 22 million below our budget. As mentioned already in March, the main events were the earthquake in Turkey and the weather-related events in New Zealand. The impact from man-made losses was below expectations and just as a reminder, our large loss reporting to the budget both reflect an undiscounted view, actual reserves as part of the reinsurance service results are now discounted.
However, as for the large losses, it does not really make a huge difference because the affected business is mostly short -- and on top of that, the Turkey earthquake is largely in Europe currently for us, therefore, not discounted based on local interest rates.
COVID-related claims from our accident and health business in Southeast Asia have decreased as expected in the first quarter, the negative impact was in the double-digit million. Apart from this, the loss development for both current and prior years was very much in line with our expectations, the improved quality, profitability should have enabled us to increase the confidence level of our reserves as we have not changed our, of course, is not particularly early in this year. Altogether, the resulting combined ratio is at 92.3%. On the combined ratio, I think it's really worthwhile to recap on the main differences from IFRS 4 and also to provide some more details on the composition of the 92.3%. So let's assume a target combined ratio of 94% under IFRS 4 for 2023 to arise at a target combined ratio under IFRS 17. As you know, we have a couple of structural changes and the discounting. So as for the structural changes, we have the change in disclosure where commissions and so-called nondistinct investment components are being deducted from both the nominator and the denominator and we also have some reallocation of costs, the so-called non-directly attributable to cost, which are now captured in other income. So both effects together reduced the combined ratio by roughly, I'd say, 2 percentage points. So that brings us from the 94% to 92%. And in Q1, this has been offset by the change in the newly established risk adjustment, and that offsetting effect was roughly 2 percentage points. Now I'd say, that's usually rather stable number, but there is, of course, some seasonality in the risk adjustment especially in renewal quarters like this. So it's probably a bit higher, but again, that's 2%. So this brings us to actually a 94% target under IFRS 17 for the Q1 combined ratio before discounting. On the discounting, for the first quarter, please bear in mind that this is not fully based on the currently higher interest rate level for the business written in 2022. And before the corresponding CSM release and transition from the LRC to the LIC is based on initial lock-in interest rate. So therefore, discounting effects is a blend of lower yields from prior years and higher interest rates in the first quarter.
Overall, the positive -- the discounting effect should be somewhere between EUR 150 million and EUR 250 million. I would say that translates roughly into 5 percentage points effect on a combined ratio. And that will bring us to a target combined ratio -- a discounted target combined ratio of roughly 89% for the first quarter. So the difference to the reported combined ratio is probably an amount of 1 percentage point, the accident and health, the things in Asia Pacific. Other than that, I think the underlying development is very much in line with our expectations. So the underlying combined ratio was very strong. So the difference to the reported combined ratio is mainly the increase in the confidence value of our reserves in the quarter. And please bear in mind that we have not only changed our cautious reserving approach at initial recognition and then on top of that, we have the risk adjustment. So therefore, I think the confidence level increased well in the first quarter. So the discount effect compared to an interest accretion on reinsurance liabilities of roughly EUR 129 million, so a negative number which is now being captured in the reinsurance finance result, which is a separate line item in our presentation just between the reinsurance service result and the investment. So this is the result of the sharp increase in interest rates observed in '22. On the one hand, the positive discount effect is increasing quickly due to the fast turnover of the CSM. On the other hand, the unwind of the discount is largely based on the lower interest rate environment.
As currently high interest rates will gradually increase the finance expenses. This is only temporarily positive for the P&C earnings. Over time, of course, the combined discount of reserves and the interest accretion should be largely neutral to the results. So moving on to the investment results in P&C., the performance was favorable, driven by a strong ordinary income. Our inflation protection contributed 90 -- sorry, EUR 39 million to the result. You might wonder why this number is much lower compared to previous quarters, even though the CPI inflation has not decreased to the same extent.
So here, I want to mention we have not changed the accounting method there. However, we did make a change to the allocation of the overall expected contribution to the individual quarter. This is really to ensure a more economic accounting view in our quarters with the amortization now being based on the expected inflation for 2023 instead of the report.
So this will not change overall earnings contribution from our inflation-linked bonds, which we expect to be around EUR 160 million, 1-6-0 million for the year but it will change the recognition over the course of the year towards a more stable pattern for the year 2023, as you can see in the first quarter. The other result on this slide is comprised of the currency result as well as other income and expenses. Other income and expenses mainly includes the non-directly attributable expenses, as mentioned earlier, and the currency result, which was positive number of EUR 47 million in the first quarter. On the next slide, as mentioned during the first quarter of 2023, 3 large nat-cat events occurred with a devastating earthquake in Turkey and Syria, we reserved a little more than EUR 200 million. But for the cyclone with heavy rain and flooding in New Zealand, we reserved together another EUR 100 million.
These 3 events together with 2 man-made losses have not fully utilized our large loss budget of EUR 356 million in line with our usual practice in the past, we have not released unused part of the budget. You might have noticed that the weather-related events in the U.S. at the end of the quarter are not on our list in the appendix, those losses occured after closing our books. However, but we are not really looking at a huge insurance event here. And based on early indications, good part of losses might also stay within retention of primary insurance. Anyhow, the Q2 budget of EUR 395 million sees a lot of room for other events in the second quarter. So let's move on to Life & Health. Reinsurance revenue decreased by 2.6%. As Jean-Jacques mentioned, the decrease in revenue is largely connected to the in-force management actions for our U.S. mortality business.
Additionally, we have discontinued morbidity business in APAC. Longevity business remained rather stable under IFRS 17, entire financial solutions business is now also recognized within reinsurance revenue including around EUR 115 million fee business, which was previously recognized in other income and expenses, as you know, the so-called deposit accounting for the U.S. GAAP. With the transition to IFRS 17, profitability is structurally a bit higher because loss-making business has been revalued at transition and should not longer affect the income statement. This effect is mainly connected to our mortality business and the earnings contribution should increase and stabilized forward. In contrast, the earnings level and pattern of our Longevity and Financial Solutions business is largely unaffected by the transition and the performance in both lines continue to be positive. As expected, COVID claims in Life & Health continued to decline from quarter-to-quarter. The figure of EUR 11 million is therefore significantly lower than the previous IFRS 4 figure of EUR 123 million. The previous year's IFRS 17 result that you see here has been less affected by COVID-19 claims as most of the claims were already anticipated and absorbed by the risk adjustment and this year's end in 2022. So the ordinary investment income in Life & Health was favorable, the previous year's period included positive contributions from our extreme mortality cover and also from equity participations, both were nonrecurring items. Overall, the EBIT does not include larger one-off effects. However, I would like to emphasize that EBIT exceeded expectations and should not be taken as a quarterly run rate for the next quarter. So more generally, the significant level of CSM and risk adjustment will support a more stable and sustainable earnings pattern in the future. The new business contribution in Q1 was EUR 77 million. Naturally, this figure can be volatile in individual [ quarters ] due to the transactional profile of our Life & Health business. Other Components of the change in CSM are changes, estimates and the regular CSM release. I think it's worth mentioning that the changes in estimates are mainly connected to prolongation of existing treaty, which under IFRS 17, is not captured in the new business CSM. However under Solvency II, the value of new business prolongation business is included. Assumption changes can generally have larger impacts due to the long-term nature of Life & Health business, of course, in Q1, as you can see, we have not recorded any larger individual effects. Finally, the regular release of the CSM is not unusual. So on investment on the next slide, the development of our investments was again very satisfactory. The ordinary investment income is strong. A number of factors play a role here. The asset volumes increased based on a strong operating cash flow and higher reinvestment yields are more visible in our returns from fixed income securities. In contrast, the contribution from alternative investment have decreased compared to the very strong performance in prior years. As explained, the contribution from inflation-linked bonds was EUR 39 million, reflecting the inflation expectations instead of the actual reported CPI number. Otherwise, the investment income is pleasantly unremarkable and particularly in terms of the new ECL, expected credit loss and the higher share of investments at fair value through OCR. As you know, we have included some negative P&L effect for private equity and real estate valuation, the ROI guidance and the absence of these effects resulted in a moderate seasonal outperformance versus our guidance. All in all, I'd say the ROI of 2.7% is above our target of [2.4%] which still includes allowance for negative valuation volatility. On the next slide, on the reserves at the annual reserve review by Willis Towers Watson was concluded earlier this year. I'm happy to provide you with their final view on our reserve and resiliency at year-end 2022. As indicated in March, the resiliency reserve decreased in 2022 of the actual reduction of EUR 325 million is at a lower level of our indication of around EUR 300 million to EUR 400 million.
The overall level now stands at close to EUR 1.4 billion, would like to highlight that this number includes any changes in inflation expectations. Just as a reminder, the reserve study generally does not include any resiliency reserves in the most recent underwriting years. Therefore, we will most likely see those coming through in future [ reserves ]. And we are committed to further rebuild the resiliency reserve during the course of the year, as previously stated. And if you would like to perform further analysis on our reserving position, we have also published the loss triangles for the year 2022 on our website today.
To conclude my remarks, the first quarter of 2023 was rather pleasantly underwent through them, which makes the analysis of the first time out of [ '17 ] number is probably a bit easier. As things stand today, the overall performance is supported to reach or exceed our group net income of EUR 1.7 billion. And on that note, I'll hand back to you, Jean-Jacques for the comment on the outlook.
Thank you very much, Clemens, for this overview. So before commenting on the outlook, just a few observations on the April renewals. They were characterized by a market environment similar to the January renewals.
Industry capital remains constrained with limited new capacity entering the market. Reinsurers generally continue to adjust prices and structures in a disciplined way during this April renewals. Most significant price increases could be achieved in the nonproportional property CAT business. Accordingly, we'll continue to shift our portfolio towards nonproportional business and reduced some of our shares in our proportional portfolio. Due to the loss experience, rate increases were stronger in the U.S. than in Asia, particularly in Japan, but the general development was positive for almost 4 lines and regions. This is also true for our Marine business, where a lot of focus was maintained not only on price but also on terms and conditions and definition of coverage. Altogether, as you can see on the slide, the premium volume increased by 7.1% for our portfolio with a risk-adjusted price increase of 6%. As the business development in the first quarter supports our expectations for the full year, we've kept our guidance unchanged. We continue to expect a growth in revenue of at least 5%, even though there has not been any material impact from valuation volatility on the investment side during the quarter. Our ROI target of more than 2.4% still includes the initial assumption of decreasing valuations for private equity and real estate. Additionally, the ambition to restore our reserving strength in P&C reinsurance, which was mentioned by Clemens, continues to be embedded in our guidance. In Life & Health, the Q1 performance was strong. And even though this was not driven by one-offs, it was still above our expected run rate per quarter. And altogether, I'd say we've had a good start to the year, and we're quite confident that we will achieve our guidance. We do believe that the new accounting regime overall provides more insights into our business and our profitability. However, we appreciate that it does need more granular information, which we're trying to do today, in particular, to assess the potential impacts on interest rates, on some of the established KPIs. As an addition to our official guidance, we, therefore, decided to provide you with further assumptions or some IFRS 17 P&L items on this slide. The combined ratio in P&C is expected to be between 91% and 92%, reflecting the favorable market environment, but also our ambition to restore reserving strength. Of course, this figure is subject to changing interest rates affecting the discounting effect. The same is true for the current assumption for insurance finance expenses expected at around EUR 500 million for the full year. In Life & Health, the expected interest accretion is structurally smaller number than in P&C, where premiums are usually paid upfront and claims paid at a later stage. The service results in Life & Health should be between EUR 750 million and EUR 800 million. And altogether, the expected EBIT numbers, our 2 business groups are unchanged. We have only adjusted assumptions to at least instead of around to reflect the favorable performance in the first quarter and to better align these assumptions with our group net income guidance of at least EUR 1.7 billion. This concludes our remarks, and we would be happy to answer your questions as usual. Thank you very much.
[Operator Instructions]. The first question comes from the line of Vikram Gandhi with Societe Generale.
It's Vik from SocGen. I've got a couple of questions. And just a couple of quick clarifications, if I may. First of all, on P&C Re, how should we think about the Russia-Ukraine in -- Russia-Ukraine impact affecting the 1Q 2022 numbers on Slide 6. Is that a drag in the new business CSM? Or has it amplified the new business loss component or it's a mix of the 2? That's question one.
The second one is on the amortization of Life and Health CSM, the EUR 189 million figure that goes into the P&L. Now when I look at the P&L on the left-hand side, is there a way to know what all lines does the EUR 189 million figure hit? And how do we get a sense of what the other profit contributors are? I think you said the EUR 115 million from Financial Solutions was recognized as revenue. Does that drop through entirely as profit?
So those are 2 questions and the clarifications, we don't have the roll forward of the CSM stock for P&C Re. Are we likely to get that going forward? And the other bit is on Life and Health Re. In future, are we likely to get the breakdown of the CSM stock by different lines of business, mortality, morbidity, longevity and financial solutions. That's really all.
This is Clemens. I'm happy to pick up those questions. Probably on the latter when it comes to future disclosures, yes, we will be providing the CSM breakdown for Life & Health. I can probably share the numbers, I guess, overall, nicely diversified the CSM stock with probably a bit more than 30% on Financial Solutions, roughly 30% should be mortality, 25% longevity and the rest should be morbidity . So really just off top of my head, but those should be quite stable numbers. As for the CSM work, development on the P&C side. Yes, we will provide those. I mean this is mainly driven, of course, in the first quarter by the CSM new business. So there are no major adjustments there. As you know, these ones are quite quickly, but happy to share that on Q2 going forward, I guess we will be able to do it.
On the -- you might help me Vik, on the other questions, but I'll try to recall those. So the first one, being where would in the prior year column, Ukraine losses would show up? So we do form when we assess the business when we do the initial recognition, let's say, at the beginning of the year, we do it, of course, as the expected claims, the expected premium, et cetera, et cetera.
And then we have a risk adjustment usually, and we have a CSM on the new business. So if there is any adverse development stemming from, for example, large losses, exceeding our expectations, then you will see that either in the risk adjustment. So it might end up the reduction of the risk adjustment for the CSM. That would be the first one as long as we are in the coverage period for the LRC and if this is a business where we have already claims where we are in the [ LIC ], then you would see that in the actual over expected. So that would be actual over expected. And then it really depends on your -- in the prior years, the current year. So that will then go into current service or past service. Past service is really comparable with something that we would call a runoff result. So we will see that also going forward. And I think speaking to you -- also the question on the loss component, new business, which lines that are, I think, actually I would always think the loss component something that is basically the result of either rather cautious reserving. And then as I mentioned in my comments, that can, of course, let's say, low interest rate and lower rating environment will structurally have a seasonal effect in the first quarter on the loss component. Why is that? When you discount your expected claims with lower interest rate then you are more likely to be in an onerous contract position, and you will structurally pick up a bit more onerous contracts. Secondly, it depends really on the granularity of your valuation. And you know there is a different approach or impact, a different approach for recognizing losses versus the gain. So you have to pick up the losses right away at initial recognition while the CSM is in stock and is distributed over time. So structurally, there is more likelihood that I do not have the exact composition, but I would still watch the loss component, see to those -- on rather has been future profits. Did I cover all your questions?
Yes, there was one more on Slide 9, the Life & Health CSM amortization, the EUR 189 million number? So I'm just trying to square this against -- on the end of P&L on the left-hand side.
Yes, that's release. So that's the regular CSM release, I guess, what we're seeing here. So structurally, the way it works under IFRS 17, that is contributing to the reinsurance revenue, so that will go into the top line first and find its way to the reinsurance service. The EUR 189 million could be a run rate, probably a bit lower change an estimate here, but that could be a normal run rate, I think.
The next question comes from the line of Freya Kong with Bank of America.
Firstly, could you give us a little color on your P&C runoff in the period and where this comes through in the P&L? And are we right to think that any reserve buffer building this year will happen primarily through additional conservatism on the current year? Secondly, reinsurance revenue growth you've reiterated at, at least 5% at the group level but your revenues were down almost 1% on year-on-year in the quarter. How should we think about the evolution of this as we go throughout the year and separately between P&C and Life & Health possible? And can we just get a starting figure for reinsurance revenue for 2022?
Very happy to pick on those questions. So runoff results, I think, really in line with expectations in the first quarter, nothing really material. I don't have a number here but I think in line with expectation that will come through actual versus expected past service.
And that is a line item that will then ultimately feeds into the reinsurance service result, in terms of the, let's say, the resilience reserves that we are going to build in the year, that will mainly be in the current year, that assumption is right. As for the revenue, as mentioned, I think there are a couple of accounting effects in there. If we were to look at the gross written premium in the first quarter, I'd say it's probably a growth of roughly 2% on gross written premium. So you see there is a slight difference to IFRS 17, but not that substantial. And as Jean-Jacques and myself mentioned, that's mainly really due to the 1/1 renewal and the structural changes, but then also the discontinuation of some of the larger pro-rata. However, we do believe that both from an accounting perspective, but also particularly in the upcoming renewals, so 1st of April, but also our growth completion process and on [indiscernible] business, there are still opportunities. So we still convince that we're going to reach the 5%, particularly on the P&C side, on Life & Health. You see the reduction was mainly due to some discontinuation of morbidity business. So we're going to see -- but again, as you've seen also in the value of new business and business CSM as rather transactional seasonal business on the Life & Health side. So we do expect some growth also coming into revenue over the course of the year. So we are still sort of committed there. So that's -- I hope I captured all of your questions. We don't have a 2022 revenue -- full year revenue number yet.
Okay. Just a follow-up, if that's all right. The 91% to 92% combined ratio, how much of that is assumed to be buffer building and for this year? Would it be around 2 to 3 points based on the walk you gave?
Yes. I think that would be probably right assumption. I think we said we want to do this in one go. So this will all be in the combined ratio. So the potential rebuild that we mentioned at least the EUR 325 million. We want to do that in 2023, and that has been built into that guidance.
The next question is from Hossain Kamran from JPMorgan.
So Kamran Hossain from JPMorgan. Just on the reserving piece, I just wanted to clarify, so if you're talking about EUR 300 million that you want to add or kind of get back into the buffer this year, based on the walks you gave for Q1, my math -- and I might well be wrong, gets me to about -- you've done about 85% or a little bit more than 1/4 of that in Q1 already. So I just wanted to clarify that Kamran maths on that is kind of okay. The second question is on -- okay, I guess when you've got the guidance for the year of EUR 1.7 billion, you talked about 2 things during the year when you gave the guidance. One was a reserve build. I think I kind of understand that now. The -- and the second was like private equity write-downs. Could you maybe talk about how that's -- or kind of what progress there's been on that or what indicates there have been on private equity write-downs that were kind of implicit with new guidance for the year?
Yes. Happy to do so. So the first one on the buffer rebuild. So I mean, we don't usually really quantify, it's very difficult to quantify this on a quarterly basis. Of course, we will look at it at year-end. However, if we think about it, I mean, you've seen the difference from the reported to our target combined ratio. That's quite a substantial number probably in the first quarter. I mean then, of course, we have our initial loss picks, which remain cautious. As usual, we haven't changed our reserving policy, and then, of course, we have the risk adjustment, on top again, that's another 2 percentage points, you can view that, of course, to some extent, as the future profits or at least loss absorbing. So overall, I think we've made quite a step in the first quarter when it comes to the buffer. As for the private equity funds, they are now with the new accounting regime under IFRS 9 value through the P&L. So there is potential for volatility in the P&L.
For the first quarter, we haven't seen anything yet. But it's at least on the private equity side already, it's a portfolio of more than EUR 2 billion. So a potential downside of, let's say, 10% in terms of valuation that gives you that the private equity funds are valued on a historically high level, is still, I believe that there is more to come.
Again, nothing seen in the quarter yet in the first quarter. So we are slightly optimistic that we won't see all of that. However, I mean, there's still 3 quarters to go. So we still have that baked into our guidance.
The next question comes from the line of Andrew Ritchie with Autonomous.
And thanks for the additional color you've given in the commentary on IFRS 17. The first question, I just want to understand again sort of seasonality in the combined ratio. I understand the loss component normally maybe bigger, but it's small. I'm more interested in the risk adjustment seasonality. My thinking is risk adjustment over time in steady state should be sort of neutral to the combined ratio because what you're adding for new business is being released for expiring business. But just clarify, there's a net drag, particularly in a renewal quarter if the business is growing. Is that a correct understanding? So just that's the first thing, clarity on seasonality of the risk adjustment. Second question, you mentioned a couple of times some discontinuation of morbidity business. I think you said APAC, so I think Asia, what is that? I'm just curious what country, why have you discontinued it? What's your thinking there? And it's not a question, it's just an observation when you discuss renewals, I think the April renewal disclosure you've given is on premium or revenue, I'm not sure it's not labeled. Why not give us consistently the CSM renewal impact as in the CSM renewal year-on-year impact.
Andrew, I'll start with the seasonality of the combined, particularly the risk adjustment, you're perfectly right, the observation usually would have been dealt due to, I would say, market cycle and interest rate. So loss component, as I mentioned, Andrew, this is rather minor in the first quarter this year, but I would expect that number, and you can see it in the first quarter last year, I would expect that to be the seasonality structurally. On the risk adjustment, same here, though, when we are growing, of course, as long as we are growing for it like that. Then of course, you will have a slight drag on the risk adjustment, but I completely agree there is seasonality, more seasonality. So the roughly 2 percentage points would come down over the course of the year with the upcoming renewals. I can't give you a number, but I would expect that rather being around 1% as opposed to 2%. But that's really just a rough guess. On the CSM, I do take it away. I think that's still based on our logic on written premium. But again, I'll take it away with respect to CSM on new business and how we can make that into future renewals.
Sorry, on the life morbidity?
Yes.
The new business...
Yes. Klaus will take that Andrew, sorry.
I'm happy to do so. On the morbidity in Asia, we have seen some, let's say, development in China, we don't like. First of all, screening took up significantly and if in the Western world, you tell the people you should do more screening, 2% or 3%. We'll do that in China, it's 20%. And that has an impact on the incidence rate. They are also using pretty old morbidity table. We have not really stopped writing morbidity in China, but we have stopped giving long-term guarantees. So this is now annual treaty. If the client agree and if they don't agree, then we just have stopped writing that. So it's a pretty cautious measure in order to avoid additional problems in the future.
Klaus, could I ask, would this affect anything in force? Or is the in-force business or yearly -- not the long-term guarantees, et cetera?
No. We have switched to a maximum 10-year guarantees already in, I guess, 2015, '16. So these treaties are impacted as well, and we might increase rates either now where we can or in the very near future if we have to wait for the, whatever, 5-year or 10-year guarantees we have provided. This is what we are writing right now is just on annual terms.
The next question comes from the line of James Shuck with Citi.
Congratulations on being one of the first companies to guide us through this. My first question, in terms of the combined ratio guidance you've given for the full year 2023, so the 91% to 92%, what are the actual kind of moving pieces within that guidance that you're planning for? Thank you for the split out in Q1. But I'm interested in some of those moving pieces. So what is the discount rate assumption that you have in there? What's the risk adjustment, those sorts of things so I can measure against what might be some quite volatile items as we move through the year. Connected with that, actually, I think you were implying that the risk adjustment impact in Q1 was sort of seasonally negative versus the actual build. And therefore, the normalized number that you run us through, but the target number in Q1 might be about 1 point worse because of that seasonality. But if you could just confirm that I've understood that correctly.
And then my final question is somewhat simplistic, but I just want to see if I'm thinking about this in the right way. The new disclosure that you gave for the net result from reinsurance contracts, that's a negative EUR 368 million in Q1. Is that just a clear view of the profitability of your overall retro and INS programs so that if we look at that over time and as you increase the disclosure periods will build up a track record of just how much you paid for your retro versus how much you've actually claimed on it.
James, thank you for your question. This is Clemens. So on the combined ratio guidance. So it's really just -- I should let that an approximation to give you all a sense of what are the components, et cetera, I don't have an exact walk for the year-end. But let's try to look at the components. So if we say, well, we arrived at 89 to, let's say, 89-ish to 90 in the first quarter. And then, yes, I would confirm the risk adjustment, I would expect that number to be lower. So the 2 percentage points on the combined ratio. In the first quarter, I would expect that to come down. So if we think of that being 1%, then we land somewhere at a 89 target combined ratio for the full year. If we assume that interest rates stand where they are and that both, that the blend of interest rates coming into discount for 2023 and the 2022 prior year's discounting that roughly land at 5%, but that's the assumption. That's why it's so difficult to come up with an exact combined ratio, but that's the overall assumption. And the difference should be then the reserve of a bit, which I think should work quite well. On the retro, I think there's a bit of a front-loading effect in the first quarter. I mean, as you've seen, for example, the earthquake in Turkey, which is not part of our K-quota share, probably other effects. So that number, as you mentioned, James, it is up over the course of the year. So that should settle out if you compare that with the cost. But there is some front-loading effect in the first quarter.
The next question comes from the line of Derald Goh with RBC.
Can I just start quickly with a clarification, please. So just on a risk adjustment, I just want to understand that this is on top of your buffer. So the increase of EUR 74 million in the quarter, that is not to be read as the buffer build itself. And the first question is, so you've got EUR 1.9 billion of CSM in your P&C at end Q1. And am I right to assume that this is even higher if we were to allow for any loss components. If so, what's the stock of loss component that you have in P&C as at the end Q1? And my second question is just on the equity on transition. So that's moved from EUR 8 billion, roughly EUR 8 billion to EUR 9 billion at year-end '22. I'm just a bit surprised that the stock of unrealized losses has been reduced by more. I'm just trying to understand why that's the case.
Yes, Derald. On the risk adjustment, I mean, the way it works. And I think you will have seen that the level of risk adjustment overall is roughly EUR 800 million now in P&C. And of course, this is meant as a buffer on top of the best estimate. But as we haven't changed our cautious approach on the initial loss, there will also be, of course, as we are structurally rather picking loss ratios at the upper end of possible range of best estimates, we see this risk adjustment as future profits. And finally, of course, with the runoff would end up in the P&L. So I would view these as future profits. On equity at transition, I think the moving parts were -- and I think we have it on the slide, the reduction of unrealized losses is, of course, roughly -- I think it should be roughly EUR 800 million, but then we have a widening of the credit spreads, which I think added another EUR 200 million to it. So that should explain at least some of the difference there.
And the stock of loss component within the P&C, CSM?
I don't have the exact number, but I would guess the loss component not be too high, to be honest, probably in the area of somewhere around EUR 150 million to EUR 200 million as reported.
The next question comes from the line of Vinit Malhotra with Mediobanca.
Just a few clarifications really from my side. So one question is on the business lines and the investments. So just mostly follow-ups, apologies if it has been addressed. So just on the nearly 35% increase in P&C new business CSM. Is this consistent with what you were expecting? Or is it consistent with the targets that have been laid out? Because it looks like a pretty powerful strong number. Is it mainly pricing-driven. Any bit more color on that would be very appreciated, Clemens. Secondly, on the -- and just checking gain, my understanding is that the mark-to-market write-downs haven't happened now, given where interest rates are, that -- what's the -- why should we keep building it? Or why should we continue to expect it? And apologies if you've clarified that, Clemens, just the capital. And lastly, on the Life, I've understood there's no one-offs in this number of EBIT. But then you also said don't extrapolate, why not? If you could just clarify that, please?
Vinit, I'll take the first 2 questions, and then I'll let Klaus answer the latter on Life & Health and see how optimistic here. On the first one, the increase in the new business CSM. I do believe it's a very good reflection of the actions that we've taken in this renewal. As Jean-Jacques mentioned, I think the shift from pro rata to nonproportional has a huge impact on the quality of our portfolio. And also the discontinuation of some of the pieces, et cetera, we actually see that when we look into the pieces of the business or new CSM, you can see that really across the life of business. And I think that's structurally something we expected. It's very difficult though to come up with an exact number. But again, all these factors and I should mention also the terms of conditions that have improved quite significantly have also contributed to that. Why is it difficult to put a right number for typically the same reason that we have for the combined ratio when it is the discounting because when you think of the way the CSM is built, then of course, discounting of expected claims have an effect on the CSM as well. So therefore, it's not easy to do the math. But overall, I think it is in line with our expectations. On the market valuation, private equities, yes, we haven't seen anything yet in the first quarter, at least nothing substantial. You can see that in the P&C -- sorry, in the P&L, our investment result is really mainly fueled by the ordinary income, which is overall pleasing, but there's really no noise on either fair value through the P&L, be it private equity, be it STP investment, be it other impairments. So it's very, very quiet, and I still do expect those fair values coming down. Because as you know, then it structurally, there is a time delay in the reporting of these funds because these are mainly private equity funds, so they will provide a net asset value, and there is always a reporting time lag by providing the net asset value by the company. So therefore, I would expect that still to come through in the second, third or fourth quarter. So that's obviously still a bit more cautious on that side. I hope that clarifies your question on those 2.
The lifecycle, the maximum sum insured per Life, what we have is EUR 25 million. And we have not that many, but we have a couple in the range of EUR 15 million, EUR 20 million, EUR 25 million. And Q1 '23 was a very benign quarter. I have not seen any large claim except that large claims in Life with EUR 25 million is not comparable to a large claim on the BNP side. But for us, it would be large. And 1 or 2 claims could happen any time. So I would be a little bit careful here and have not seen any large claims in our accounts for the first quarter. I would be a little bit cautious to multiply that by 4. I would deduct 1 or 2 claims and then multiply it by 4 to get a reasonable estimate for the full year. That's very simple answer to the question.
The next question comes from the line of Will Hardcastle with UBS.
And thanks for the IFRS 17 walk through. Just on reserve redundancy, first of all. I guess I'm just trying to understand why we're sort of using an absolute number last year and where we're trying to get back to. Just trying to think about that really as a percentage of reserves and why that wouldn't be a sensible way to think about it. Because you've come down quite a long way over 5 or 6 years. Just trying to understand really the concept of absolute number versus percent is really that question.
And then just where you're replenishing going back to the next -- last year's level, just which line that's coming through? And just maybe verification on Kamran's question, where he asked you about the quantification. I think he had about EUR 85 million. Is that what's gone through in Q1 or not?
Good morning Will, it's Clemens. On the absolute number of reserve redundancies versus the relative number, you're perfectly right. There are a couple of drivers, so in the nominator and denominator if you like. I think the denominator has been very much affected by the IBNR level by large losses, et cetera. So we've grown the book quite substantially over the last couple of years. We've seen large loss complex. So all of this has contributed rather through the denominator. And as I mentioned earlier, the reserve redundancies in the studies, they only come through with the time lag of 2 to 3 years. So the lack of -- the fueling of the nominator because those have been rather difficult year. That is one effect. I think that has brought that number down. So we will see how that looks like at year-end. We are not aiming a certain percentage really. So therefore, it was really just to give you a guidance to say, well, if we have used of EUR 325 million, then we want to replenish that in one go. Then we will see where we are percentage-wise. I do believe if we are -- if we land there at year-end, I think we do feel quite comfortable with the overall, but then we will look at the percentage and see how that develops and also how much comes in the new reserve study from recent underwriting years. So we'll revisit that. For the first quarter, again, it's very difficult to really come up with a number, as you know, because this is many moving parts, actual assumptions, et cetera. But I wouldn't be surprised if it's a triple-digit million number in the first quarter to give you at least sort of a hint, I mean, if you do the walk-through of the combined ratio. And if you consider that our initial aspects are still rather cautious and I think then we have made some steps in the first quarter. But again, it's very difficult to come up with an exact number. Hope that helps, Will.
The next question comes from the line of Ivan Bokhmat with Barclays.
I have a few questions on P&C, please. Maybe the first one is on the interest accretion of EUR 500 million. I wonder if you could just help us understand what's the right way to think about it? Should we think about it as a percentage of earned premiums, so like a 3% compared to 5% discounting? And how should that develop going forward? Are those 2 become close and matched? Is there any seasonality there? The second question also on P&C. So the 94% combined ratio that you used as a starting point that I understand assumes benefits, the 2 percentage point benefit from the hard market. I just wanted to confirm that and to maybe get your feeling of how the renewals that you have seen are factoring into that estimate right now. And I'm a little surprised that you're already factoring it in from Q1 2023 when essentially the really hard renewals have only just started. And then the implication from this question and all the discussion on reserving, I think is that for 2024, potentially, if you're no longer adding to the buffer, there could be quite a significant step down in the combined ratio from 91%, let's say, to 88% to 89%. I just want to understand why that might not be the case.
Ivan, it's Clemens. So on the first one, interest accretion the EUR 500 million is rather, let's say, an assumption based on what we've seen in the first quarter, what we've seen in last year, interest accretion, et cetera. So that should be a rather stable number on P&C, but I wouldn't think of it as we really made this number bottom up. So I wouldn't see this as a percentage of something. But of course, that number will go up in coming years. We are now with the high interest rate discount this year, of course, we will feed into that number. So there is a bit of a front load effect from higher discount rates and lower interest increase structurally. And then as you know, we did fair value approach transition. So we are looking at rather lower lock in yields in that come via the interest accretion. On the combined ratio, I mean, it was really just to give you a sense of how you could think about the work. Yes, we started with the 94%, it does reflect -- although it's not really -- we made from up there, but it does reflect our confidence that this renewal and also the [ 14 ] renewal have been in line with expectation. We always said we have increased the quality of the book. So therefore, the 2 percentage points, I think should reflect the 8 percentage points price increases to the 6 percentage points price increases in this renewal. So therefore, yes, I think that's the way to look at it. If we were -- I mean, to replenish the reserve in one go. And I think, yes, then this cost some upside in the combined ratio or downside, if you want to read it that way next year. But again, it's a long year still and we do know what happens. So we are rather cautious of course, and there is potential for upsizing.
The next question comes from the line of Henry Heathfield with Morningstar.
Just a couple of kind of IFRS 17 one, and thank you for the detail you provided. On the CSM, the Life and Health CSM amortization and P&L, I think you said in the Investor Day that was going to be around 8% per year. And it looks like it's around 14% today. So I was wondering if that might come down over the rest of the year? Or we should just think about somewhere in the middle? And then with regards to P&C CSM, could you provide like a rough indication of what the amortization rate of that might be into the P&L, that would be really useful. And then finally, on the risk adjustment, it seems to have moved -- it's moved up 2.9%, a lot lower than the CSM. And I was wondering if like we should think about that with regard to the increase in the best estimate of liabilities and not related to the increase in CSM. That's it.
Okay. On the CSM Life & health amortization, I think the 8% was a rough -- yes, there can be some seasonality, but I would expect that number to be somewhere between 10% to 15% rather. It's probably a bit early to say really a run rate for Life & Health, but I would rather look at 10% to 15% amortization rate, and as for P&C, I think that as we usually have earned our premium, although the concept slightly change, it's rather an exposure-based pattern here. So there can be some difference to probably some of the [indiscernible] metrics. If you think of P&C NatCat business, for example, you would expect the release of CSM, both CSM and revenue rather be in the third quarter. However, there will be a lot of moving parts. But if I just reflect on the earnings patterns of our P&C book in general, we always said it's probably 50% or a bit more at 50% in the first year, and then that number will come down in the second year. There's probably another [ 30 to 40 ] in the second year and the remainder then going forward.
Okay. So it's -- I mean, is there like a -- of the CSM stock that you have currently and I'm thinking if I'm seeing correctly that the CSM stocks that you have of EUR 1.8 billion for P&C. Is there a -- should I be thinking about that in terms of an annual amortization rate? Or should it be more thinking about in terms of over a longer period of time as you're just alluding to pacing?
Yes. I mean, it's, of course, that's mainly fueled by the renewal in the first quarter. So it's the absolute number by end of the third quarter. But of course, I mean, a larger part of that will be earned in 2023. That's for sure. So some of the renewal of the newly built CSM has already been released via the revenue in the Reinsurance service side in the first quarter. And some of that, of course, will then be released in the coming quarters. And then the CSM will be further fueled by the next quarter, so by the one April renewal, et cetera, but the most buildup is usually, of course, is in the first quarter.
Okay. And on the risk adjustment, sorry?
Yes. What was the question again, sorry. On the risk adjustment?
Yes. So yes, your CSM is up 13.5%, your risk adjustment is up 2.9%. I recall that your risk adjustment is rather a mechanical calculation based on your estimate of losses essentially. So should I view the rise in the risk adjustment as sort of -- on top of your liabilities. So that's essentially what you're looking at what you're claims liabilities have risen by and there's really no relation to that rise, the rise in the CSM. So essentially, your future profitability is looking much better where your claims haven't risen that much. Is that kind of the good way seeing that?
Yes. I think if you look at the mechanics of the risk adjustments, they do not really attach to the CSM build. Because the CSM is basically the result of all the moving parts, including discounting, et cetera. So there are a lot of moving parts in there. As for the risk adjustment, I mean, from the method that we implemented is try to very much aligned to what we do in the pricing. So in our margin approach, we apply percentage on our capital, on our available capital, of the required capital. So I think in the CSM side, the risk adjustment is a bit higher, but that's really rather -- and again, whilst we are growing when you look at the P&C side. the risk adjustment [indiscernible]. But eventually, of course, this will be released, of course, with the coverage period of contract.
And where will that be released into? Is that going to flow into the insurance service results as well? Or is that going to come into somewhere below that?
Yes. Perfectly right. That is coming to the reinsurance service with that.
The next question is a follow-up from Freya Kong with Bank of America.
Just a follow-up on changes in the Life & Health business. So the EBIT last deal has been restated to EUR 300 million. How should we think about the excess COVID claims that you saw in that particular quarter being accounted for? Would they have just been adjustments to the CSM through limited P&L impact?
Yes, Freya. That's right. On the reinsurance services results, the main driver is that the COVID claims have been absorbed by the risk adjustment in this year. So it works exactly as it should do under IFRS 17. So you have a much more stable and robust result and those were mainly captured by those 2 elements. And just to complete the picture, Freya you have, of course, when you look at the investment result, and I think I mentioned it, that I'm not sure that you have. So below the reinsurance to have the idea a couple of one-off effects that lead to a higher EBIT last year. That's mainly the extreme mortality cover. There's no basically no contribution in the first quarter this year and a one-off effect on one of the net equity participation.
The next question comes from the line of Thomas Fossard with HSBC.
Two last questions on my side. The first one would be on the P&C side and on the full year profit guidance for the current year. Clearly, there is more impact now going forward from interest rate changes and evolution. Can you provide some indication of how the [ 1.6 ] EBIT P&C or the [ 1.7 ] net profit guidance for the group could move or could change depending on level of interest rates. I mean any sensitivities that you could provide would be interesting. The second question would be on the Solvency II level at the end of Q1 for the [ 260 ] -- [ 261 ], can you -- any comments that you would like to share on what have been driving the 9% increase versus the end of the year?
Clemens again. So on P&C as for the full year profit guidance, I would say there are a couple of moving parts. The first with respect to 2023, is the replenishment of the reserves. So that's one element that we've built in there. As for the interest rate comment that you mentioned, I'd say structurally, of course, there is in this year with increased interest rate tailwind on the EBIT. So potential upside on the EBIT, whilst, of course, that will come through in future periods by higher interest accretion. So again, when we look at our Q1 numbers, if we take that as representative for the next couple of quarters, we will book at an interest accretion of roughly EUR 130 million, that translates into the EUR 500 million for the full year. And if we assume the 5% on the combined ratio roughly is really just a rough guess on discount factor than we have a tailwind of somewhere between EUR 70 million and EUR 120 million probably on potential interest rate tailwinds. So that's the upside. Again, that will come back, of course, in future periods with higher interest rates. But again, that will be just some noise between the periods. So overall, that should level out and be a stable number. Again, with the reserve replenishment being built into that number, totally, of course, there is more upside to that number going forward than anything else. On Solvency II, I think it's really mainly the driver is -- so the driver upside is driven by the own funds. So required capital remained rather stable There are some moving parts. I don't know all of those on the top of my head, but it's really driven by the increase in own fund, and that's mainly, of course, our operating profit. That's really the main driver. You should keep in mind, though, that dividend is still included that will be excluded then in the second quarter. So the dividend being paid for 2022 is still included in the own funds plus we have no accretion of the 2023 dividend in there yet that will be only included later in the year. So that explains probably -- so that will be in the fourth quarter, I think that we will see the overall dividend impact for 2023. I hope that helps, Thomas.
The next question comes from the line of Darius Satkauskas with KBW.
Thank you for a very helpful disclosure today. A few questions, please. So the first one is a slightly different angle from what Thomas asked. Have you done any sort of stress test around the combined ratio guidance? I mean, what happens if interest rates move 25% basis points up or down? And are you thinking about providing some sort of sensitivities going forward? Am I right to assume that the discounting effect will increase as you go through the quarters because the -- what you've captured 1Q included a lot of source written before. Now the second question is sort of how should we think about the hard market benefits timing? I mean, once you're done with the rebuilding your reserve cushion this year, would you be willing to sort of take down the sort of the -- what you book the losses at -- sorry, would be willing to start with lower sort of booked ratios? Or are we really going to see the benefits in the runoff over time?
Darius on the first one, it's really difficult to assess the overall impact on interest rates. However, I do believe that the 2023 guidance is a very global. So it would allow for potential upside the downside. The big renewal already -- so I think there shouldn't be a huge impact coming from interest rate on our combined ratio and ultimately on our EBIT. I think we should come up with sensitivities going forward. I shouldn't -- I do believe, as we did today, should provide you with some sensitivities and guidance on interest rate impacts. We do believe the concept is ultimately helpful in a steady state, but it does provide productivity, particularly on the P&C side. Therefore, we should overcome this by disclosing more information as they do so going forward. As for the top market benefits, I think structurally, we will stick to our cautious reserving forward. We will, of course, will not decrease our initial product cautious loss picks. But ultimately, of course, if earnings develop as they are expected, of course, that will come through. The bottom line at some point in time, that's clear that could be sooner than later, depending really on the growth and how next year we'll go to see the upcoming renewal. It's really too early to say.
The next question comes from the line of James Shuck with Citi.
For a follow-up. So just 2 things. I think you mentioned on the Life CSM roll forward. There's EUR 232 million there for change of estimates. I think you mentioned prolongation of existing treaties as the reason. Am I right in thinking of that sort of almost as kind of same concept as contract boundaries. And therefore, one might expect that to kind of annualize and recur going forward. And therefore, we should expect to see positive development and factor that into future CSM build. That's my first question. Secondly, with the best will in the world, I haven't had a chance to go through the loss triangles, but thank you for publishing those early this year. Are there anything you'd like to call out from those lost Triangle disclosure that you give? Obviously, we'll have questions on it later, but I think like easier if you can highlight anything worth highlighting.
So no, as for the lost Triangle nothing really that's spin out, I should say, on the reserve study and were to expect also from [indiscernible]. I think there's no major movement in the expected losses. So the estimate that it didn't really move a lot probably approved for they already built in inflation assumptions to social inflation, but also other inflation. So that was rather stable in terms of estimates I should have that. On your first question, would you mind repeating that?
Yes, sure. So the change in estimates for the Life CSM roll forward this EUR 232 million positive. And you mentioned that was prolongation of existing treaties. Just wondering how recoverable that figure is?
Yes. Perfectly right, that's down to contract boundaries and IFRS 17, that's a different concept than [indiscernible]. I wouldn't say you can just see this as a recurring item. But structurally, yes, those numbers would show up usually. I don't know if it's a specific contract or but structurally, that's something that would always be visible and not being captured by the CSM. And that's why we would actually disclose that going forward. I want to make one correction. I did mention that in the Solvency II ratio, one of the drivers was that the dividend for 2023 is still in the own funds, but that's actually not accurate. That was already been taken out in Q4 2022 probably I just mentioned that, Thomas, that was your question, just to correct that.
The next question comes from the line of Tryfonas Spyrou with Berenberg.
I just have a couple of quick final questions. So on Life & Health, how should we expect the new business tend to develop over the year? I appreciate this could be quite lumpy. So any color or expectations here would be quite helpful. And the second one is on the Asia impact on the accident health in [Audio Gap]
Health -- you're out right into the fact that the business is rather transactional. You can call it lumpy. But usually, you would say, some of the larger transactions, both on the financial solutions side, but also on longevity rather in the second half of the year. So therefore, we are still committed and that we reached our plan, which is roughly [ 400 to 500 ], I think of new business is probably around [ 40 to 50 ] for the whole year. So we are still committed to reach that. And I'll hand over the second question on accident it has to Michael Pickel.
Yes. As Clemens stated, we had in the first quarter, double-digit moving impact in our figures. We canceled all these loss-making contracts so far as well as COVID disappeared. We do not expect to foresee any major impacts for the next quarters.
Ladies and gentlemen, there are no further questions at this time. I hand back to Jean-Jacques Henchoz for closing comments.
Well, thank you very much. I hope the Q&A helped you with all the disclosure, I appreciate that it's a heavy on IFRS 17, and thank you very much to Clemens for clarifying all these questions. In short, I think we wanted to convey that we have a good start in the year, uneventful quarter as Clemens put it. We see continued momentum at both P&C with the renewals. I think we'll have very good renewals in July. We have some structured business and package business and in Life & Health has as a strong pipeline. So we're quite upbeat about the outlook for '23, but also beyond. And the significant CSM to some extent, also the risk adjustment to give you an indication of the future earnings power which make us quite confident as far as the outlook is concerned. So hopefully, this was a useful exercise today to give some light to these numbers. Of course, some KPIs will emerge over time, and hopefully, we'll help you with the disclosure. Next opportunity will be the conference call on the 9th of August, where we will have the Q2 numbers. With that, I close the conference call, and thank you all for joining today. Thank you.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.