Hannover Rueck SE Q1 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kamran Mark Hossain - JPMorgan Chase & Co, Research Division - Analyst : 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? Unidentified Company Representative 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 11, 2023 / 8:30AM, HNRGn.DE - Q1 2023 Hannover Rueck SE Earnings Call 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.

Question: William Fraser Hardcastle - UBS Investment Bank, Research Division - Analyst : 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?

Question: Darius Satkauskas - Keefe, Bruyette, & Woods, Inc., Research Division - Analyst : 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?

Question: Tryfonas Spyrou - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : 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 (technical difficulty)